Product Description

In The Little Book That Builds Wealth, author Pat Dorsey—the Director of Equity Research for leading independent investment research provider Morningstar, Inc.—reveals why competitive advantages, or economic moats, are such strong indicators of great long–term investments and examines four of their most common sources: intangible assets, cost advantages, customer–switching costs, and network economics. Along the way, he skillfully outlines this proven approach and reveals how you can effectively apply it to your own investment endeavors.

Product Details

• Amazon Sales Rank: #129877 in Books
• Published on: 2008-02-29
• Original language: English
• Number of items: 1
• Binding: Hardcover
• 126 pages

Review
"A detailed exploration of Warren Buffet′s "wide economic moat" concept – how to find companies with a true in–built competitive advantage." (Financial Times, Tues 26th February)

"Pat Dorsey...discusses in an easy to read style why economic moats are such great indicators of long term performance." (Pensions World, October 2008)

Review
"A detailed exploration of Warren Buffet′s "wide economic moat" concept – how to find companies with a true in–built competitive advantage." (Financial Times, Tues 26th February)

“With this suitably small–sized book under your arm – or neatly in your handbag – the World’s markets are yours.”Investment Adviser Monday 12 May 2008

From the Inside Flap

To make money in today′s dynamic market environment, you need to invest in companies that will perform in the face of sustained competitive pressure. But how can you accurately identify companies that are great today and likely to remain great for many years to come?

The answer to this question lies in competitive advantages, or economic moats. Just as moats were dug around medieval castles to keep the opposition at bay, economic moats protect the high returns on capital enjoyed by the world′s best companies. If you can identify companies that have moats, and you can purchase their shares at reasonable prices, you′ll begin to build a portfolio of solid businesses that will improve your odds of doing well in the stock market.

In The Little Book That Builds Wealth, author Pat Dorsey—the Director of Equity Research for leading independent investment research provider Morningstar, Inc.—outlines this proven approach and reveals how you can effectively apply it to your own investments. Step by step, Dorsey discusses why economic moats are such strong indicators of great long–term investments and examines four of their most common sources: intangible assets, cost advantages, customer–switching costs, and network economics. After establishing a firm understanding of moats, Dorsey shows you how to recognize moats that are eroding, the key role that industry structure plays in creating competitive advantage, and how management can create (as well as destroy) moats.

Along the way, Dorsey provides an informative overview of valuation—because even a wide–moat company will be a poor investment if you pay too much for its shares—and illustrates the issues addressed through case studies that apply competitive analysis to some well–known companies.

Although the moat concept is not a new one—it was made famous by Warren Buffett—the modern–day investor can benefit from what it has to offer. With The Little Book That Builds Wealth as your guide, you′ll quickly discover why moats should be an integral part of your analytical investment toolkit and learn how to leverage this approach to build a portfolio of high–performance stocks.

Customer Reviews

Moat is King
Warren Buffett coined the term moat which represents a competitive advantage that a company can possess over its competitors. Pat Dorsey did a great job explaining what a moat is and categorized it into four categories: Intangible Assets, Switching Costs, Network Effect, and Cost Advantages. Whenever I talk to a potential client or give a seminar on investing, I always talk about moats stemming from four sources that Mr. Dorsey explained. I absolutely loved this book.

- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market

A sensible approach to picking stocks
How do you pick stocks? Do you pay attention to earnings? Chart patterns? Growth potential? Your Uncle Morty? Instead of all that, use the same basic system that investment guru Warren Buffett perfected: Look for solid profitable companies that own a piece of the market, buy their stock and hold it a long time. Morningstar, the investment research company, uses the same approach to analyze and rate stock values. Its director of equity research, Pat Dorsey, explains its stock analysis system in this small volume. The stock selection system calls for seeking companies with protected unique advantages, called "economic moats." What sounds straightforward in theory may not be as easy in practice: Finding a structurally protected stock today is not necessarily a simple stroll across the drawbridge. Still, getAbstract finds Dorsey's presentation succinct and readable, and recommends it to investors who are not yet familiar with value investing and similar approaches.