How do you know when youve read enough When you arent getting any new

How do you know when youve read enough when you arent

This preview shows page 67 - 70 out of 263 pages.

How do you know when you’ve read enough? When you aren’t getting any new information. When it all starts repeating itself, you’re there. Does this sound like a lot of work? Oh, poor baby. Does it sound like more work than flipping burgers all day when you’re seventy-five? A lot of people apparently think so, because they don’t seem to be willing to do it. I can’t figure out why people are willing to work their butts off in some menial job but aren’t willing to work a hundredth as hard to be rich. Go figure. (If you’re one of those people, please shoot me an e-mail at [email protected] and explain!)
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To me it’s real simple: If you’ll do what others won’t do, you’ll get what others won’t get. I did what other river guides didn’t do. And I have a life they don’t have. If you’re willing to do the homework your friends won’t do, a few years from now you’ll live the life they can only dream about. That dream life begins with finding an industry that has meaning for you. Once we have Meaning solved, we dig in on the best businesses in that industry. We’re looking for a durable business that has a plan to keep competitors at bay. We call this quality a Moat, and it’s the second of our three Ms. MOAT A Moat is about the durability of the business—the competitive advantage a company has over other companies in the same industry. Just as a Moat protects a castle from attack, a durable competitive advantage protects a company. Let’s say you own a company. If you don’t have some way of blocking competition, some niche that you alone occupy or some way to make your product obviously better than the other guy’s, what’ll happen if your competitors suddenly lower prices? You’ll have to lower your price as well or lose your customers. And there go your profits. Under no circumstances should you own a business that has to compete on price unless your business is the undisputed low-price monster. But I’d prefer you look for a business that’s so durable it can pay its people well, raise its prices every year, and never be forced to lower them by a stalking competitor. Whole Foods’s plan is to make their perishable section huge. Perishables are really dangerous because they, well, perish . Quickly. If you can control your perishable losses better than the other guy, he can’t compete with you on quality, quantity, or price, because he loses too many perishables and has to make up for the loss with either smaller quantities and variety, or lower quality that he gets at a lower cost, or he has to raise his prices to pay for the losses, none of which is going to help him keep customers. This is rather clever of Whole Foods and they
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pull it off well. Their stores have an overflowing-horn-of-plenty feeling. It’s like you’re in an urban jungle of delicious-looking food. No other market compares. If they keep learning how to do that better and better, they can make a Moat so wide their customers won’t ever leave them and the competitors can never get near them. The perishables secret helps create Brand Moat—a wide Moat indeed. Think about Coke again. These guys have been making sugar water for
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  • Spring '20
  • Warren Buffett

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