Stock Investing for Beginners: Fantastic Moats and Where to Find Them – How to Beat the Market Year After Year and Achieve Financial Freedom By Investing … The Best In The World (Stock Investing 101) by Freeman Publications

WHY DO MOATS MATTER?
“No formula in finance tells you that the moat is 28 feet wide and 16 feet deep. That's
what drives the academics crazy. They can compute standard deviations and betas,
but they can't understand moats.”
— WARREN BUFFETT, FAMED INVESTOR
f you had to guess how many mutual fund managers have beaten the
market over the past 15 years, what would you say? Remember, these
are the best and brightest minds that “professional investing” has to offer.
75%?
50%?
Nope, not even close.
25%?
10%?
Nope.
Over the past 15 years, only 7.69% of mutual fund managers have beaten
the market.
That’s 1 in 13
Which is kind of insane…
Because in any other field if less than 8% of the professionals performed
above the average…
Well, we’d have to reevaluate what “average” even means, wouldn’t we?
But in investing, we simply let this kind of behavior slip by.
Now, why is it that some professional investors like Terry Smith and
Warren Buffett can beat the market when other “professionals” do not? We
believe it all comes down to moats! Companies with economic moats beat
the market; every smart investor (on both the individual and institutional
side of things) knows that. However, as Buffett said, a moat does not lend
itself to quantitative measures, and some “professionals” feel tied, as
Buffett said, to “standard deviations and betas.”
However in 2012, when financial research firm Morningstar released their
MOAT index, we investors, for the first time, began to have a benchmark to
track performance. Consisting of 50 stocks considered to have wide moats,
the index itself has handily trounced the S&P 500 since its inception. It’s
not perfect by any means (for example, it is far too light on technology
stocks due to outdated valuation measures), but it has served as a “4 minute
mile” for moat investors, and further demonstrates the importance of moats.
As we move further on in this book, we’ll introduce our own moat criteria
and a superior moat investing strategy. But first, let’s go back to basics –
what exactly is an economic moat?
An economic moat is an advantage or a set of advantages that protects a
business from the competition, helps it scale new heights and grow, and
stabilizes its operations even during adverse market conditions. A moat is

Stock Investing for Beginners: Fantastic Moats and Where to Find Them – How to Beat the Market Year After Year and Achieve Financial Freedom By Investing … The Best In The World (Stock Investing 101) by Freeman Publications