In this thread, we will go through the wide moat investing framework of Morningstar. In the medium and long term, wide moat stocks outperform narrow and no moat stocks.
The Wide Moat Index is a great place to get some ideas for high quality companies. On Aug 2024 I see Fortinet, Adobe, Microsoft, Google, and Amazon. Surprisingly, I don't see Visa or MasterCard. Those are textbook examples of wide moat businesses. Perhaps the valuation is too rich for Morningstar?
One performance aspect to note - when markets crash hard, everything will tumble. Maybe the wide moat companies will fall slightly less. The question then becomes who will recover first? I would argue the wide moat companies will be some of the first! Their products and services are virtually necessary for the (global) economy to function so they will continue seeing revenue stream even if they are muted for a bit.
It's like what Buffett states: he tries to do way better during bear markets and to follow the market during bull markets. Exactly the same goes for many wide moat stocks!
Some companies are structured differently. You can't for example compare the financial structure of a bank with an industrial company. When you want to compare them, you should make some adjustments so you're comparing apples to apples
excellent content
Wonderful summary, adding value to my thinking, appreciate it!
Absolute best
The Wide Moat Index is a great place to get some ideas for high quality companies. On Aug 2024 I see Fortinet, Adobe, Microsoft, Google, and Amazon. Surprisingly, I don't see Visa or MasterCard. Those are textbook examples of wide moat businesses. Perhaps the valuation is too rich for Morningstar?
One performance aspect to note - when markets crash hard, everything will tumble. Maybe the wide moat companies will fall slightly less. The question then becomes who will recover first? I would argue the wide moat companies will be some of the first! Their products and services are virtually necessary for the (global) economy to function so they will continue seeing revenue stream even if they are muted for a bit.
Agreed (Visa and Mastercard should be in there).
It's like what Buffett states: he tries to do way better during bear markets and to follow the market during bull markets. Exactly the same goes for many wide moat stocks!
Thanks this is great. Is the updated list of companies actually accessible?
Hi Antonio,
I shared it on Twitter yesterday: https://twitter.com/QCompounding/status/1681699095189094401?s=20
What is adjust "IC" when needed?
Investment capital.
Some companies are structured differently. You can't for example compare the financial structure of a bank with an industrial company. When you want to compare them, you should make some adjustments so you're comparing apples to apples
💥 yes