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The Little Book That Builds Wealth: The Knockout Formula for Finding Great Investments

4.1 of 5 stars 4.10  ·  rating details  ·  143 ratings  ·  17 reviews
In "The Little Book That Builds Wealth, " author Pat Dorsey--the Director of Equity Research for leading independent investment research provider Morningstar, Inc.--reveals why competitive advantages, or economic moats, are such strong indicators of great long-term investments and examines four of their most common sources: intangible assets, cost advantages, customer-swit ...more
Hardcover, 200 pages
Published March 1st 2008 by John Wiley & Sons (first published January 1st 2008)
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getAbstract
A sensible approach to picking stocks

How do you pick stocks? Do you pay attention to earnings? Chart patterns? Growth potential? Your Uncle Morty? Instead of all that, use the same basic system that investment guru Warren Buffett perfected: Look for solid profitable companies that own a piece of the market, buy their stock and hold it a long time. Morningstar, the investment research company, uses the same approach to analyze and rate stock values. Its director of equity research, Pat Dorsey, e
...more
Nathan Dellinger
Pat Dorsey does an excellent job at explaining some of the thoughts that go into the valuation of a company. The language is easy to understand and the writing is concise and to the point, making the book nice and short. I wouldn't go straight from this book and start trading immediately, but I think it gives good ideas to start valuing companies you like and are interested in. From that point you could paper trade or back test to see how your choices play out. The first half of the book on the ...more
Mohamed Fasil
Fantastic book for learning about moats. This books clearly explains what the moat is and how they are build around business. Pat Dorsey has neatly written in a simple to understand manner and I could read it very fast and re-read many times.

Some of the key points I take from this are
1. Switching cost
2. Network effects
3. Brand value
4. ROIC with Above all
Matthew
I'm not generally a fan of the Little Book series, as I think most of them are summarised rip-offs. This one (didn't buy it, got it free) is pretty good though -- there's actually new intellectual content in there that was thought provoking and, I think, practically useful.

Dorsey's contribution comes from his analysis of what truly constitutes economic moats (or sustainable competitive advantage, or whatever else you want to call it), and his distinction between genuine moats and "mistaken" one
...more
Tirath
I love how the book focuses on understanding competitive advantages in terms of WB's concept of 'moats'. Talks about customer stickiness, intangible assets, the durability of earnings power and stuff like mistaken moats.
Analysts get caught in clubbing all brands equally, but brands empower a company with pricing power and customer stickiness. Amazing when customers cant really go anywhere else.
The strength of regulatory licenses and the weakness of patents.
The snowball effect of being part of a
...more
Julian Bu
possibly the best book on moat investing, somewhat surprisingly coming not from a professional manager but a researcher
Waseem
Am not much of a stock trader/investor but I love picking up books on the topic which has success principles that can help you in all aspects of life - like this one ...

... However I this book in particular it was too much common sense and nothing greatly ground breaking... Something I've always had in mind about stocks/building or buying a business - is just re-affirmed in this book and something is hope any smart investor would at the very least know - but not poor either so 3 stars...

To Our C
...more
Dangewehr
A very easy-to-read book about moat and competitive advantages.
Christine
[audiobook review]
If you pick stocks by only looking at P/E ratios or watching the trend of the share price over a period of time, then this book will probably help encourage you to spend a lot more time researching and thinking about why you are buying the stocks you are buying. It has straightforward outlines for how to determine companies that have economic "moats" and advantages, presents good examples, and injects quite a few plugs for morningstar.com.
Palash Kusumwal
While the author's focus is on picking good stocks, this is a good read for entrepreneurs to understand how industry analysts & investors analyze your company when you're in a very competitive industry. Concept of economic moats explained in a very easy to follow way.
C.J.
A GREAT beginning book for people interested in learning the basics of company analysis. Not too accounting based (see"The Five Rules for Successful Stock Investing") but solid, nonetheless.
Mark Peacock
Great book by one of the founders of Morningstar. Provide solid advice for spotting businesses with "motes" to entry market. Helps recognize when the right time is for investing in great companies.
Kate
I've been recommending this a lot lately to colleagues who are either trying to understand the point behind equity research or conduct competitive analyses.
Sergei Nemirovsky
This is a very well written and easily read book on investing principles practiced by Buffett and Munger. It was a pleasure to read.
Youngju
good "economic moat" framework. Definitely provides enormous foods for thought.
Chad Touchberry
Good book on ID'ing economic moats.
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