The Little Book That Builds Wealth : The Knockout Formula for Finding Great Investments

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, oreconomic moats. Just as moats were dug around medieval castles tokeep the opposition at bay, economic moats protect the high returnson capital enjoyed by the world’s best companies. If you canidentify companies that have moats, and you can purchase theirshares at reasonable prices, you’ll begin to build a portfolio ofsolid businesses that will improve your odds of doing well in thestock market.

In The Little Book That Builds Wealth, author PatDorsey—the Director of Equity Research for leading independentinvestment research provider Morningstar, Inc.—outlines thisproven approach and reveals how you can effectively apply it toyour own investments. Step by step, Dorsey discusses why economicmoats are such strong indicators of great long-term investments andexamines four of their most common sources: intangible assets, costadvantages, customer-switching costs, and network economics. Afterestablishing a firm understanding of moats, Dorsey shows you how torecognize moats that are eroding, the key role that industrystructure plays in creating competitive advantage, and howmanagement can create (as well as destroy) moats.

Along the way, Dorsey provides an informative overview ofvaluation—because even a wide-moat company will be a poorinvestment if you pay too much for its shares—and illustratesthe issues addressed through case studies that apply competitiveanalysis 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 Wealt has your guide, you’ll quickly discover why moats should be anintegral part of your analytical investment toolkit and learn how to leverage this approach to build a portfolio of high performance stocks.