Economic moat
An economic moat is whatever keeps competitors from storming a profitable business: a brand people pay extra for, switching costs that make leaving painful, a network that gets more useful as it grows, or a cost position rivals can’t match. The castle is the business; the moat is the reason it’s still standing in ten years. Warren Buffett popularized the metaphor, and it’s the organizing idea of this entire site.
Moats matter because capitalism is an attack on high profits. Any business earning exceptional returns attracts competitors dedicated to taking those returns away — and without a moat, they eventually succeed, dragging profitability back to average. A moat is the difference between a good year and a durable franchise.
How the Moat Index measures this
A moat is a judgment about durability, and no formula settles it. What a formula can do is look for the fingerprints a moat leaves in a company’s own SEC filings — and that’s exactly what the Moat Score does. High, steady gross margins are evidence of pricing power; returns on invested capital that clear a ~9% hurdle year after year are evidence competitors can’t break in; a conservative balance sheet and disciplined capital allocation are evidence the moat is being maintained rather than leaked. Four sub-scores, weighted and combined into a 0–100 composite, per the methodology. What we don’t do: interviews, channel checks, or vibes. If it isn’t in the filings, it isn’t in the score.