Live data
MSFT — ROE, Operating Margin, Net Margin. Open MSFT on the Ledge to see current values.
Compare
| Moat Source | How It Works | Examples |
|---|---|---|
| Network effects | Product improves as more people use it | Visa, Google Search, social platforms |
| Switching costs | Too expensive or painful to leave | Enterprise software, banking |
| Cost advantages | Produce at lower cost than anyone | Scale economies, proprietary processes |
| Intangibles | Brands, patents, regulatory licenses | Pharma patents, luxury brands, regulated utilities |
| Efficient scale | Market only supports one profitable player | Railroads, pipelines, utilities |
Key point
Buffett calls durable competitive advantages 'moats.' The wider and deeper the moat, the longer a company can earn returns above its cost of capital.
Try it
Look at MSFT or V (Visa). Check their **ROIC** and margin stability over time. Consistently high returns signal a wide moat.
Key insight
Check-in
A company has 60% market share, no viable competitor, and pricing power. But regulators are showing interest. What's the biggest risk to the investment thesis?
Check your understanding
Sit with the ideas.
A payment network processes 65% of all card transactions globally and earns a 55% operating margin consistently for a decade. A competitor launches with lower fees. What protects the incumbent?
Why: