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Stock Strategist

Beating the Market One Wide Moat at a Time

Morningstar's Wide Moat Focus Index shows how myopic markets have mispriced moats and how a longer-term focus can pay off.

Detailed analysis of competitive advantage and a steadfast focus on the long-term cash-generating ability of businesses are at the core of Morningstar's approach to equity investing, and so we spend a great deal of time thinking about economic moats and forecasting long-run cash flows. (Click here to learn more about how Morningstar analysts assign economic moat ratings to companies.)

But how can we have confidence that our approach adds value? After all, elegant theories are one thing, but generating excess returns in a very competitive marketplace is quite another, especially given the increased efficiency with which information flows between companies and investors.