Investment Thesis

Consider This When Investing in Companies

Moat could be a water-filled ditch surrounding a castle, used as a preliminary line of defence medieval times.

In short, moat is protection. Castles can have a moat, but companies can have a moat too, virtually speaking. Patents, brands, licences can be the moat of the company. Another example: Moat could be that it will be hard for customers to switch to competing products for valid reasons, and they are likely to be stuck with products the company are offering. But moat can be more than that. For a company, moat is protection of something valueble, and something that provides a unique advantage and barrier against competitors.

Some companies have particular outstanding moat, and these companies are simply called moats. How do you know that a company has moat, or that a company is a moat? One sign could be that they are rising prices, and perhaps they are growing in popularity and selling more every quarter, while rising prices.

Read more about this elsewhere, it's important, but it is just one thing to consider when investing in companies.

Write Your Investment Thesis

When writing an investment thesis, you might want to discuss the moat of the company. But an investment thesis is so much more. There is much ground to cover when writing your thesis, and it all depends on the type of investment.

Also note, an investment thesis does not have include a buy-recommendation. You can be bullish, bearish, or inconclusive.

It is always helpful to know why you own something and what you expect to happen with what you own. This is true wheter we're talking stocks or socks, commodities or cars. Furthermore, do you recognize any value that is not represented by the market?

Anything you own, you should clearify your position on why you want to own it, and what you expect to happen to it in the future. Clarify your position, and don't wait to change your mind if something new comes up.

Writing an investment thesis is somthing that takes years to master well. Everyone can write a thesis, but to write a good one, let alone a masterpiece, takes practice.