Soft Economic Moat

An economic moat that relies on qualities such as management expertise and top employees rather than brand name, pricing power and etc.

Buffett invests in companies that have soft economic moats. He looks for companies with capable, motivated management. However, this may be hard to evaluate for the average individual investor. Bear Stearns boasted of surviving plenty of recessions and downturns before imploding in 2008. On the other hand, Goldman Sachs was able to short subprime securities due to the foresight of its management and did better than its industry peers. This may also be a soft economic moat.

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