A Banner Year for No-Moat Firms
We take a look back at 2009 performance by economic moat.
With the rocket-powered market recovery we've witnessed since March, it is easy to forget that not all stocks have participated equally in the rally. As we've noted, firms without competitive advantages performed much better at the start of the market upturn, and that is evident in the year-to-date performance data. These companies did so well partly because of how poorly they did in 2008.
No-moat companies were some of the most likely to have issues with financing or to be the most exposed to the economic cycle. In a panic, these are the stocks that got sold first. When it was clear we had avoided another Great Depression, these stocks soared. Wide moat stocks, which for the most part had been hurt less during the downturn, had less room to come back.