Made a Portfolio Like Warren Buffett

We are telling about some such stocks, which are on the scale of economic mot...

 What are the things you keep in mind while choosing stocks for your stock portfolio? Do you see the regular growth of the company? Do you keep an eye on cash flow? Attention should be paid to these. However, a good company may not always live up to these. Growth may slow down in a poor economic environment and this may worsen its position on the cash flow front as well. What is the reason why some companies keep performing well for a very long time? The answer to this question lies in a concept called economic mote. This term is given by the world's famous investor Warren Buffett. If you build a portfolio using this concept, then it has tremendous ability to withstand even the worst of times.

What is economic moat?

In the Middle Ages, there was a moat outside most of the forts, which was filled with water. This measure was used to avoid attackers. The wider the moat was, the more difficult it was for the attacker to enter the fort. This gap is called moat. Buffett used this gap as a ruse to identify good companies. According to him, companies that perform well over a long period of time have the ability to maintain growth in the business.

How to recognize MOT?

It is difficult to identify when a mote is forming. In this case, the example of Asian Paints can be given. The brand value of the company is tremendous. Despite the fierce competition in the paint market today, it is miles ahead of other companies. However, 10 years ago this could not have been predicted. The company was in the initial growth phase then. However, investors should keep in mind that along with MOT, the financial condition of the company should also be good.

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There are many ways in which a company can create economic momentum. Here we are giving information about some of them:

Low Cost:

Successfulcompanies also make products like other companies. However, their cost is less than others. This helps them to achieve higher profit margins.

Switching cost: Some companies offer products that cannot be duplicated.

Brand Power:

When a company builds a strong brand, it is also economic mote. In this case, examples can be given of Nestle India, Hindustan Unilever, Colgate-Palmolive, Gillette India and Pidilite Industries.

Entry Barriers:

There are some sectors which are difficult to enter due to regulation. The way ITC is dominant in cigarettes and Coal India in coal mining.

We are telling about some such stocks, which meet the criteria of Economic Mot. You can think of investing money in these companies.

Jagran Prakashan:

The company dominates the print media market of UP. It is way ahead of others in terms of readership and ad value. Its Hindi newspaper Dainik Jagran has the highest circulation in the country. Dainik Jagran has managed to maintain its growth for the past several years, despite the tough challenges faced by Hindustan and Dainik Bhaskar.

Asian Paints:

With a powerful brand and a large distribution network, the company has been able to maintain its dominance in the paint industry.

McLeod Russell India:

It is the world's largest tea manufacturer. It has a leadership position in India. The large size helps the company to keep costs down. It has an annual production capacity of 100 million kg, which is three times that of its nearest rival. McLeod Russell achieves the highest operating margin in this industry.

Sun TV:

This company is number one in South India. It is the only Indian media company whose profit margin has remained above 40 per cent for the last five years. However, the change in power in Tamil Nadu has weakened its momentum.