Buffet refers to the concept of moat or sustainable competitive advantage as one of the most critical factor in determining the returns for a long term investor (in addition to other criteria)
I have been reading porter's book 'on competition' and trying to get a better understanding of how to evaluate a company's competitive advantage for a long term investment.
The five forces model is very helpful in understanding the industry structure and kind of long term returns to expect in an industry. What i was able to 'understand' this time (have read the topic several times ) is that not all the factors are equally important and for an investor it is critical to asses which factors impact the industry and the company more and would influence the long term returns.
More important for a long term investor is to understand, how the five factors of competition will change and determine the future returns.
I am now trying the above exercise for some industries like FMCG/IT services / Banking etc . A good evaluation and insight into the trends would be far more useful that chasing some price targets or trying to predict the next quarter which in munger's words would be 'twaddle'