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5 Economic Moats in the Stock Market馃搱 | Why Moats Matter馃挵 - YouTube
Channel: Financial Information
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hello everyone welcome to the financial
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information channel in this video I'm
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going to give you the information about
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an economic mode and what it means in
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the stock market and I'm going to
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mention five ways that you can identify
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an economic mode in a stock now let's
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begin with the video and the mode is
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having the advantage over all the
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companies in the industry and you know
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that you have chosen a good company when
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that company has an advantage over other
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companies in the same sector and I'm
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going to mention the five ways that you
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can identify when a company has an
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advantage over other companies and one
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of the modes is having an intangible
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asset and one of those assets can be
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brand recognition and some companies do
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an excellent job of keeping the lawyer
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customers in their database for example
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when up one-ounce a new product you know
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that the product is going to sell well
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the price of the products might be a
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little bit too high however since there
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are a lot of loyal customers the
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products tend to sell really well and
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the brand recognition can be to
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different companies for example like
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Google and just right now you are
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watching this video on YouTube and
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YouTube is owned by Google which has a
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strong brand as well so having that
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strong base of loyal customers pays off
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for those company and this is very
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similar in real life for example if
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you're a sports fan and you follow
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baseball you want to be watching your
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favorite team on the TV or you're going
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to go to the stadium to support your
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team and one of the reasons is that you
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identified with whatever team you
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support and that is the first economic
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mode now let's go to the next one which
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is patents and patents is having an
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intellectual property protection and one
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of the companies that I recommended back
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in June was always all the companies
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might have the ability to create the
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same display as long as universal
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displays agree to those terms
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in addition Universal displays is gonna
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receive an amount if they allow other
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companies to create those screens now
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keep in mind that Universal displace
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might be the only one that can create
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those screens if they want to
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and I'm going to mention one of the most
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popular patents in the stock market and
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that patent is owned by Amazon if you
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ever been to the Amazon website you know
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that you can purchase an item with one
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click and the one-click patent was
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granted to Amazon in 1999 I like I
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mentioned before Amazon had that option
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to allow other companies to use that
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patent in the year 2017 Apple is paying
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Amazon to use that patent in the App
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Store and that is reason why patents are
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important he creates a clear advantage
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and the next economic or business mode
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is gonna be the cost advantage now in
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this mode we are gonna go back to Amazon
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and the reason we're going back to
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Amazon is because amazon offers really
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low prices and I'm gonna put on the
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screen and graph where the customers
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begin their product search and as you
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see in the screen Amazon has a clear
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advantage and from 2015 to 2016
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the company has increased the product
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search by 11% unlike I mentioned before
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Amazon had a history of offering
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products at a really low cost and other
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companies have that advantage as well
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McDonald's is another example Mac donors
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offer fast food and a low price and you
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have to remember that other companies
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have the low cost advantage in their
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favor and I know the company is Walmart
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Walmart dominated the retail business
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because of the low cost product so that
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is another economic or business mode in
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the stock market now let's go to the
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next one and the next mode in the stock
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market is having high switching cost and
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the high switching cost makes the
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customers they stay in their company and
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some examples can be the a
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telecommunication stocks let's say that
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you have a two-year service agreement
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with a telecommunication company and
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let's say that our company is AT&T and
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let's say when you ended up signing up
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with AT&T you ended up getting an iPhone
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if you end up leaving that contract
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before the two years you're gonna get
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charged an early termination fee and
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usually you'll be charged an early
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termination fee of around 350 dollars
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for any smartphone so that actually
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makes it hard for customers to leave
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that company for the competition and
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and other business or economic mode now
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let's go to the last one and the last
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one is very simple is the network effect
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and how the network effect works is that
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the more you search the company has the
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easier that the company is gonna create
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revenue and one example is gonna be
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Facebook Facebook monetize it users and
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I'm gonna put on the screen so you can
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see the numbers and how the company has
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increased the revenue producer and this
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graph that you see is in the Facebook
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Investor Relations page now the numbers
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are from the fourth quarter of 2016 and
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as you see these numbers are in the
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North America region and that includes
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the United States and Canada based on
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the fourth quarter of 2016
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faith will generated $19 with 81 cents
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per user most likely that number will
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increase once facebook announces the
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number in 2017 and those are the five
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economic modes that i look in a company
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now you have to keep in mind that modes
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don't last forever
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you have to evaluate the business of a
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company and think if the company has got
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a better or worse throughout the years
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and I'm going to ask you in the comment
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section below what other things are you
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looking at stock before investing and
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remember you can subscribe to the
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financial information channel wanna
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continue bringing videos about the stock
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market personal finance and how to make
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money online and I'm going to thank you
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once again for watching the video how an
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excellent day and take care my friends
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