The economic moat is a way for a company to become more competitive in the long run. Warren Buffet created this concept. A company that enjoys this advantage tends to be more difficult to imitate or outperform by competitors and is effective as a barrier for other companies to enter, duplicate and outperform what it owns. Brands, patents, identities, etc., are commonly associated with these advantages.

Moats are quite important to both the company itself and to investors because they maximize investment portfolios over time. A company's profit potential will be more sustainable and competitive if it owns a larger economic moat.

An economic moat is a concept popularized by investor Warren Buffett, representing a company's competitive advantage that protects it from competition and allows it to sustain long-term profitability and market share. Similar to a medieval castle's moat providing protection, an economic moat is a set of unique qualities that make it challenging for rival firms to erode a company's position.

These moats can take various forms, such as strong brand recognition, cost advantages, network effects, regulatory advantages, and intellectual property. Companies with a wide and sustainable economic moat are often considered more resilient and capable of maintaining profitability over time. Investors keen on long-term success typically seek businesses with robust economic moats, as they suggest a company's ability to thrive in the face of competitive pressures and economic changes. Evaluating and identifying the strength of an economic moat is a crucial aspect of fundamental analysis in investment strategies.