Is the economy coming to storm your retirement castle?
Moats were used in medieval times to protect properties, including castles. A moat is a trench, built deep and wide and filled with water, around the perimeter of the castle. A drawbridge could then be lowered and lifted to allow or deny passage from the castle to the surrounding area.
Like a castle, your retirement account should also be protected from potential threats, like a reduction in your purchasing power. And although I hate to say it, there is a potential threat on the horizon – a likely recession.
While I do believe the recession will be relatively short (average recessions last approximately 14 months), learning about wide-moat stocks and strategies now will help you make the most of the rebound when the recession is starting to turn into a rally.
What is Moat Investing?
Moat investing involves “wide-moat” stocks, but what is a wide-moat stock?
A wide-moat investment is the stock of a company that has a strong competitive advantage, meaning they are a standout in their filed or industry, and is relatively inexpensive. In other words, wide-moat stocks are strong companies, likely blue chips, that experts believe are undervalued based on real data.
There are five key attributes for wide-moat stocks, including:
- Switching costs
- Intangible assets
- Network effect
- Cost leadership
- Efficient scale
Certainty can be hard to find, especially in the midst of a recession. Companies that have competitive advantages over their competition, like Google and Amazon, are hard to imagine disappearing or even shrinking in a recession. These are the types of companies I look to invest in or shift assets to when a recession is imminent.
Let’s talk about wide-moat assets!
Join me for the BTWM Q4 Virtual Lunch Webinar on November 4 at 12 PM. There is no RSVP required for the event. The stream is accessible from your smartphone, laptop, tablet, or PC. Join us by clicking on the following link: https://www.gotomeet.me/RyanOConnell-BTWM, or by calling in at (669) 224-3412. Use access code 902-937-309.