In this chapter, the author provides some practical application of the learning and selecting stocks based on this understanding. Some key points are
- To check for economic moat, first see if the company had a historic record of generating high return on capital.
- If it is high, ask yourself a question as to how the company can maintain this return. Use the tools from chapter 3 to 7 to identify the moat that the company has that would let it maintain this return. If we are unable to pin point the right moat, the chances are there is no moat for this company.
- Once a moat is identified, think how long that moat can last for the company before it can be eroded.
No comments:
Post a Comment