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Warren Buffett on the Importance of Moats

Warren Buffett ( Trades , Portfolio ) often talks about the importance of a business' moat and how only businesses with the best moats should be considered for investment. Buffett himself only invests in such businesses, but the problem is he's never really set out exactly what he's looking for in the best moats.

Business moats

The problem is companies with the best moats often lose these competitive advantages over time. A company that can achieve sector leading profit margins is bound to result in the creation of copycats, which want to get their hands on the same margins. As Buffett explains:

With this being the case, finding companies with an impregnable moat is essential. To try and help build some idea of what an impregnable moat looks like I've gathered quotes from Buffett that give some idea of the kind of businesses he's looking for:

Buffett on moats

From the 2000 Berkshire annual meeting:

On the process of building and keeping a moat :

Disclosure: The author owns no shares mentioned.

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This article first appeared on GuruFocus .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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