User:Devikakannan/Economic Moats

Economic Moat is a comparative advantage preferably long term that a company enjoys over other rival companies in the market. The term was popularized by Warren Buffett. The concept of Economic Moat favors the idea of extra profit by a company. It helps to keep the competitors away from attacking the company's profit

Origin
Economic Moat was originally coined by Warren Buffett with the concept derived from the old castles surrounded by Moat for defense purposes. These moats are deep ditches filled with water that protected the castles and acted as barriers against invading enemies. In business terms moats are used by investors for stock analysis and valuation. According to Charlie Munger economic moats could be found in 'first-class businesses accompanied by first class managements'. Warren Buffett said "A truly great business must have an enduring 'moat' that protects excellent returns on invested capital"