by: Tam Ging Wien

The term economic moat was coined by Warren Buffet to describe the sustainable competitive advantages which a business is able to maintain over its competitors. Economic moats are usually difficult to copy or emulate which creates a strong competition barrier preventing other businesses from capturing its market share and eroding their profits. We can visually imagine a business like a medieval castle protected by deep and broad water defenses. The wider the moat, the more difficult it is to attack the castle.

When investing in businesses, we want to ensure that these businesses have one of more of the following moats in order to ensure that it continues to sustain its competitive advantage.

An industry that is monopolized by one or oligopolised by a very small number business are have a strong moat as it would be very difficult