Business
Want to invest like Warren Buffett? This ASX ETF is all about ‘the moat’ // Motley Fool Australia
The legendary investor Warren Buffett – chair and CEO of Berkshire Hathaway Inc (NYSE: BRK.A)(NYSE: BRK.B) – is famous for his coinage of the term ‘moat’.
He explained his criteria for a moat as follows in his 2007 annual letter to the shareholders of Berkshire Hathaway:
It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone. A truly great business must have an enduring ‘moat‘ that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business ‘castle’ that is earning high returns.
Therefore a formidable barrier such as a company’s being the low-cost producer (GEICO, Costco) or possessing a powerful…
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