Economic Moat Research Of Long Term Stock Investment

The Chinese stock market has been established for over 20 years,with the largest group of investors in the world,and with the rapid growth of its residents and the growing awareness of investment,the need to manage wealth through the capital markets is growing stronger.The secondary stock market for investors with a relatively fair,good liquidity,low profits tax,the advantages of low investment threshold.However,the Chinese stock market has a long history of bears market and short of bull market,imperfect systems,strong speculative atmosphere,many fake companies,lots of misappropriation,and a view of "investor seven losses and one win" from the probability.For long-term investors,the key issue is to reduce the investment risk,survive in the cruel market,share China's rapid economic growth by the listed company dividends.Based on the concept of investment master Warren Buffett's Economic Moats,we refer to Morningstar's(the top of the world's stock rating agencies)Economic Moat analysis method,analyze last decade of ROE,ROA,net margin rate,financial leverage,and consider the source of the Moat(intangible assets\switching costs,the network effect,cost advantage,effective scale)to analyze several Chinese companies.After personal practice,we found that the Economic Moat,as structural competitive advantage of enterprises,it helps the company earn excess returns(ROIC is greater than the COE)in a long time.We believe investors should focus their long-term investments on companies with wide economic moats.These companies can earn excess returns for extended periods-above-average gains that should be recognized over time in share prices.