Mark Sellers: Technology Is Not an Economic Moat
· One min read
==Economic Moat== refers to: A company's ability to maintain a competitive advantage over its rivals, protecting long-term profits and market share.
Elements that do not constitute an economic moat:
- Technology. Technology will ultimately be replicated.
- Extensive reading. ==Reading can only help one keep pace with others.== In the industry, everyone reads a lot of books; even reading more than others does not necessarily make you more competitive.
- Master's degrees or other degrees from top universities. These degrees often lead to high salaries, even if they are in stark contrast to what successful investors do.
- Experience. Some degree of experience is necessary to participate in the economic game, but in certain cases, this experience may not be helpful.
Elements that constitute an economic moat:
- Economies of scale and scope. For example, companies like Walmart, Home Depot, and Lowe's.
- Network effects. For example, eBay and Mastercard.
- Intellectual property, such as patents and trademarks.
- High customer switching costs. For example, Paychex and Microsoft.