Economic Moat

An economic moat refers to a company’s sustainable advantage that protects it from competitors, much like a moat around a castle guards it from invaders. This advantage can come from strong brand recognition, exclusive technology, cost leadership, or regulatory barriers. It helps the company maintain higher profits and market share over time, making it more resilient to competitors and economic shifts. In essence, an economic moat is a barrier that preserves a company’s ability to generate consistent, above-average returns, ensuring its long-term success and stability in its industry.