Economic Moat Evaluation Framework

A business earning 25% returns on capital will attract competition until those returns are competed away — unless something structurally prevents competitors from entering. Finding that something is the most important judgment in value investing.

Why This Matters

Buffett coined the moat metaphor deliberately: a medieval castle without a surrounding moat was vulnerable regardless of how stoutly built. The same applies to businesses. This framework moves moat assessment from intuition ("it feels like a strong brand") to a structured evaluation across five source types and a durability test, producing a moat verdict that determines how much growth value to credit in intrinsic value and what margin of safety to require.