I strongly believe that moat as a concept is somewhat illusory. All businesses tend to become commodity after a point, when more and more competition sets in. Look at the business history over a 100 year period and you will find it very difficult to find companies which have sustainable business advantage. A case in point is newspapers. Even the great and venerable Warren Buffet used to think that his holding in Washington Post to be a bullet proof investment because in his own words "You can't beat a good newspaper business franchise". However, 50 years down the line Washington Post is struggling to make money. Times change, consumers change, preferences change. As in life, there is nothing permanent about business, other the promise of change.
The markets tanked and then recovered in 2009. And what a recovery it was. Stocks have gone up 3,4 times in the last 6 months. Not the frontliners but some of the midcaps. The frontliners are just about back to where they fell from in Jan 2008. So, in a span of 2 years people who have stayed invested in the market are back to even. Those who had the guts to buy when there was mayhem around have actually made stupendous returns. But actually most retail investors have lost money. They came to the party late and left early, trying desperately to recuperate some of their losses! The lessons from all this are: 1. Ignore the market. Focus on the businesses. 2. Buy when there is blood on the street (old jungle saying!!). 3. Sell when everyone and their uncles are buying (remember Reliance Power IPO?) 4. The money is made while buying, so make sure even if you get an average deal while selling, you still make money. 5. Over the long term, trading makes only one person rich - your broker!!
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