You often hear about moats, but this chart provides a nice visual on the five types of moats that businesses may have. They are not the same, but the result is the same. There is a strong barrier that is not easy to scale. The moat argument does not mean that these stocks cannot be overvalued, but if there is an opportunity to buy cheap, they are always worth looking at. There can be a continuum of moats. Some are strong. Some are narrow, and some just do not exist.
The real value is finding moats that are being formed or in niche areas. This requires some heavy research.
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