{"product_id":"why-moats-matter-isbn-9781394377985","title":"Why Moats Matter","description":"\u003cb\u003eIncorporate economic moat analysis for profitable investing\u003c\/b\u003e  \u003cp\u003e\u003ci\u003eWhy Moats Matter\u003c\/i\u003e is a comprehensive guide to finding great companies with economic moats, or competitive advantages. This book explains the investment approach used by Morningstar, Inc., and includes a free trial to Morningstar's Research.\u003c\/p\u003e \u003cp\u003eEconomic moats—or sustainable competitive advantages—protect companies from competitors. Legendary investor Warren Buffett devised the economic moat concept. Morningstar has made it the foundation of a successful stock-investing philosophy.\u003c\/p\u003e \u003cp\u003eMorningstar views investing in the most fundamental sense: For Morningstar, investing is about holding shares in great businesses for long periods of time. How can investors tell a great business from a poor one? A great business can fend off competition and earn high returns on capital for many years to come. The key to finding these great companies is identifying economic moats that stem from at least one of five sources of competitive advantage—cost advantage, intangible assets, switching costs, efficient scale, and network effect. Each source is explored in depth throughout this book.\u003c\/p\u003e \u003cp\u003eEven better than finding a great business is finding one at a great price. The stock market affords virtually unlimited opportunities to track prices and buy or sell securities at any hour of the day or night. But looking past that noise and understanding the value of a business's underlying cash flows is the key to successful long-term investing. When investors focus on a company's fundamental value relative to its stock price, and not where the stock price sits today versus a month ago, a day ago, or five minutes ago, investors start to think like owners, not traders. And thinking like an owner will makes readers better investors.\u003c\/p\u003e \u003cp\u003eThe book provides a fundamental framework for successful long-term investing. The book helps investors answer two key questions: How can investors identify a great business, and when should investors buy that business to maximize return?\u003c\/p\u003e \u003cp\u003eUsing fundamental moat and valuation analysis has led to superior risk-adjusted returns and made Morningstar analysts some of the industry's top stock-pickers. In this book, Morningstar shares the ins and outs of its moat-driven investment philosophy, which readers can use to identify great stock picks for their own portfolios.\u003c\/p\u003e \u003cp\u003ePreface ix\u003c\/p\u003e \u003cp\u003eAcknowledgments xi\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 Guiding Principles of Morningstar’s Equity Research 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eQuestion 1: How Can We Identify Which Businesses Are Great? 2\u003c\/p\u003e \u003cp\u003eQuestion 2: When Is the Best Time to Invest in Great Businesses? 6\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 What Makes a Moat? 11\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eMoat Sources 13\u003c\/p\u003e \u003cp\u003eNotes 33\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 Why Moat Trends Matter 35\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eContributed by Stephen Ellis, a member of Morningstar’s Economic Moat Committee and head of Financial Services equity research at Morningstar\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003eMoat Trends and Fundamental Performance 37\u003c\/p\u003e \u003cp\u003eFive Key Considerations for Moat Trends 38\u003c\/p\u003e \u003cp\u003eIntangibles 41\u003c\/p\u003e \u003cp\u003eCost Advantage 44\u003c\/p\u003e \u003cp\u003eSwitching Costs 47\u003c\/p\u003e \u003cp\u003eNetwork Effect 51\u003c\/p\u003e \u003cp\u003eEfficient Scale 54\u003c\/p\u003e \u003cp\u003eBest Practices for Moat Trend Analysis 57\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 How Stewardship Affects Economic Moats 61\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eContributed by Todd Wenning, who oversees Morningstar’s equity stewardship methodology\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003eMeet Our Stewardship Methodology 62\u003c\/p\u003e \u003cp\u003eDrilling Down 63\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 Applying Moats to Dividend Investing 81\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eContributed by Josh Peters, director of equity-income strategy for Morningstar and editor of the Morningstar\u003c\/i\u003e® \u003ci\u003eDividendInvestor\u003c\/i\u003eSM \u003ci\u003enewsletter\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003eWhy Dividends Matter 83\u003c\/p\u003e \u003cp\u003eWhich Dividends? 87\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 The Importance of Valuation 93\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eContributed by Joel Bloomer, Matt Coffina, and Gareth James, members of Morningstar’s Moat Committee and contributors to Morningstar’s valuation methodology\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003eValuation Concepts 95\u003c\/p\u003e \u003cp\u003eCost of Capital and Returns on Capital 96\u003c\/p\u003e \u003cp\u003eMorningstar’s Valuation Approach 97\u003c\/p\u003e \u003cp\u003eExample: Calculating ROIC 99\u003c\/p\u003e \u003cp\u003eForecasting Future Free Cash Flows 102\u003c\/p\u003e \u003cp\u003eThe Morningstar RatingTM for Stocks 106\u003c\/p\u003e \u003cp\u003eFair Value Uncertainty and Cost of Equity 107\u003c\/p\u003e \u003cp\u003eNotes 111\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Do Moat Ratings Predict Stock Returns? 113\u003cbr\u003e\u003c\/b\u003e\u003ci\u003eContributed by Warren Miller, head of quantitative research at Morningstar\u003c\/i\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 Putting Moat and Valuation to Work: Portfolio Strategies 121\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eWide Moat Focus Index 121\u003c\/p\u003e \u003cp\u003eThe Tortoise and Hare Portfolios 124\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 Basic Materials 129\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eCommodity Manufacturers 130\u003c\/p\u003e \u003cp\u003eCommodity Processors 133\u003c\/p\u003e \u003cp\u003eMetals and Mining 135\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 Consumer 139\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eBeverages 140\u003c\/p\u003e \u003cp\u003eConsumer Products 141\u003c\/p\u003e \u003cp\u003eTobacco 143\u003c\/p\u003e \u003cp\u003eRestaurants 144\u003c\/p\u003e \u003cp\u003eRetail Defensive 146\u003c\/p\u003e \u003cp\u003eSpecialty Retail 148\u003c\/p\u003e \u003cp\u003eLodging 149\u003c\/p\u003e \u003cp\u003eNotes 151\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Energy 153\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eOil and Gas Drilling 154\u003c\/p\u003e \u003cp\u003eOil and Gas Exploration and Production 156\u003c\/p\u003e \u003cp\u003eOil and Gas Midstream 158\u003c\/p\u003e \u003cp\u003eRefining 159\u003c\/p\u003e \u003cp\u003eOil and Gas Integrateds 161\u003c\/p\u003e \u003cp\u003eEngineering Services 163\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 Financial Services 167\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eBanks 168\u003c\/p\u003e \u003cp\u003eCapital Markets 170\u003c\/p\u003e \u003cp\u003eCredit Services 172\u003c\/p\u003e \u003cp\u003eFinancial Exchanges 173\u003c\/p\u003e \u003cp\u003eInsurance 174\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13 Healthcare 177\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003ePharmaceuticals 178\u003c\/p\u003e \u003cp\u003eBiotechnology 180\u003c\/p\u003e \u003cp\u003eMedical Devices 182\u003c\/p\u003e \u003cp\u003eMedical Instruments and Supplies 184\u003c\/p\u003e \u003cp\u003eDiagnostics and Research 185\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 14 Industrials 187\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eRailroads 188\u003c\/p\u003e \u003cp\u003eAirport Operators 190\u003c\/p\u003e \u003cp\u003eAerospace and Defense 191\u003c\/p\u003e \u003cp\u003eTrucking and Marine Shipping 192\u003c\/p\u003e \u003cp\u003eWaste Management 193\u003c\/p\u003e \u003cp\u003eHeavy Equipment 195\u003c\/p\u003e \u003cp\u003eDiversified Industrials 197\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 15 Technology 199\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eConsumer Technology 200\u003c\/p\u003e \u003cp\u003eEnterprise Hardware Systems 202\u003c\/p\u003e \u003cp\u003eIT Services 203\u003c\/p\u003e \u003cp\u003eSemiconductors 205\u003c\/p\u003e \u003cp\u003eSoftware 207\u003c\/p\u003e \u003cp\u003eTelecom Services 209\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 16 Utilities 211\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eRegulated and Diversified Utilities 212\u003c\/p\u003e \u003cp\u003eIndependent Power Producers 214\u003c\/p\u003e \u003cp\u003eAbout the Authors 217\u003c\/p\u003e \u003cp\u003eIndex 221\u003c\/p\u003e \u003cp\u003e\u003cb\u003eHeather E. Brilliant, CFA, Co-Chief Executive Officer, Morningstar Australasia\u003c\/b\u003e\u003cbr\u003ePrior to assuming her current role, Brilliant led Morningstar's global equity and corporate credit research teams, consisting of more than 120 analysts, strategists, and directors. Brilliant is a member of the CFA Institute Board of Governors and is a past chair of the CFA Society of Chicago.\u003c\/p\u003e \u003cp\u003e\u003cb\u003eElizabeth Collins, CFA, Director of Equity Research, North America, Morningstar\u003c\/b\u003e\u003cbr\u003eCollins is responsible for leading Morningstar's team of North American-based equity research analysts. She has served as chair of Morningstar's Economic Moat committee, a group of senior members of the equity research team responsible for reviewing all Economic Moat and Moat Trend ratings issued by Morningstar.\u003c\/p\u003e \u003cp\u003e\u003cb\u003eMorningstar\u003c\/b\u003e is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.\u003cbr\u003eTo find out more about Morningstar’s approach to stock investing and receive a free trial of our research, visit: \u003cb\u003ewww.global.morningstar.com\/whymoatsmatter\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\"The search for the enduring economic moat is the holy grail of value investing. These modern-day protected business castles allow their owners to earn high returns on capital, the ultimate goal for any long-term investor. In \u003ci\u003eWhy Moats Matter\u003c\/i\u003e, Heather Brilliant and Elizabeth Collins provide a wonderfully detailed map to help both small and large investors find these great companies.\"\u003cbr\u003e—\u003cb\u003eJohn W. Rogers Jr.\u003c\/b\u003e, founder, chairman, and chief investment officer, Ariel Investments\u003c\/p\u003e \u003cp\u003e\"Morningstar's Economic Moat framework is a useful complement to Michael Porter's five forces model, as it approaches the issue of franchise quality from an investor's perspective. Armed with Morningstar's moat framework, I've been able to make better assessments of companies' competitive positions, which is a critical element of my stock-picking process.\"\u003cbr\u003e—\u003cb\u003eMichael Luciano\u003c\/b\u003e, investment analyst and U.K. pilot fund manager, Fidelity Worldwide Investment\u003c\/p\u003e","brand":"Wiley","offers":[{"title":"Default Title","offer_id":47990487777509,"sku":"NP9781394377985","price":22.0,"currency_code":"USD","in_stock":false}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/1842\/7735\/files\/9781394377985.jpg?v=1761788025","url":"https:\/\/k12savings.com\/es\/products\/why-moats-matter-isbn-9781394377985","provider":"K12savings","version":"1.0","type":"link"}