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An economic moat is a structural barrier that allows a business to resist the natural forces of competition. In a standard market, high profits act as a signal for other companies to enter, replicate products, and drive prices down—a process that eventually erodes a company's ability to generate wealth. A moat interrupts this cycle by making it difficult or expensive for competitors to take market share, enabling the business to perpetuate its earnings and survive far into the future.Because these barriers exist, the company does not have to constantly reinvent its core model to survive. Instead, it can rely on its established position to maintain a steady output of value. This structural durability makes the business's long-term trajectory more stable and less prone to the sudden decay that typical firms face when a new rival appears.
One of the most enduring forms of a moat is Brand Power, where a name creates such high consumer trust or habit that people are unwilling to switch to a cheaper alternative. Coca-Cola provides a classic example of this; it has spent over a century building a brand that occupies a unique "real estate" in the consumer's mind, allowing it to sell what is essentially a commodity with much higher margins than generic competitors. Similarly, Scale and Cost Advantages occur when a company grows so large that it can deliver services at a cost that smaller rivals simply cannot match. Amazon utilises its massive logistics network and volume to offer prices and delivery speeds that would be financially ruinous for a smaller retailer to attempt.
Other businesses perpetuate themselves through Network Effects, where a service becomes more valuable as more people use it. Instagram is a prime example of this dynamic; the platform's primary value to a user is the presence of their friends and family, which means a new competitor cannot simply offer a better interface to win—they would need to move the entire social circle simultaneously. This is often paired with High Switching Costs, which make it too painful for a customer to move to a competitor. Apple provides a masterclass in this with its "walled garden," an ecosystem where its hardware, software, and services (like iMessage, iCloud, and the App Store) are designed to work harmoniously together but intentionally difficult to use with outside devices. Once a user has invested in the apps, storage, and accessories within this garden, the cost of leaving—not just in money, but in time and frustration—creates a barrier that preserves the company's customer base. Each of these moats serves to insulate the business from the "mean reversion" that typically forces profits toward zero, making the long-term outcome of the business more a matter of its internal nature than of market dynamics.
I don't like shorting.
When you buy a stock, the most you can lose is 100% of your investment, but your potential gain is infinite. When you short a stock, your maximum profit is capped at 100% (if the company goes bankrupt), but your potential loss is mathematically infinite because there is no limit to how high a stock price can climb. This creates a "bad bet" where you risk everything for a relatively small reward.
Shorting is also a battle against time. To succeed, you must be right about a company’s failure and the exact timing of the market's reaction, all while paying interest on the shares you borrowed. Instead of fighting the natural upward trend of human progress and productivity, it is far more rational to invest in "compounding machines"—high-quality businesses that grow in value over the long term. This allows time to work in your favor rather than against you.
Markets are made up of fallible people and are often wrong, sometimes wildly wrong about what an asset is worth. A good investment often involves reading the situation better than other market participants and going against the tide.
The market often makes silly mistakes:
In 2021, Elon Musk tweeted "Use Signal" (referring to the private messaging app). Investors rushed into Signal Advance, an obscure medical device company, causing its stock to surge from around $0.60 to over $70 in days. The messaging app isn't even a public company.
Money is worth more today than in the future. We would all rather have $1,000 today than $1,000 in a year's time.
But how much more valuable is money now vs a year from now? Would you take $1000 now or $1100 a year from now?
Deciding what rate of return is acceptable to you is important for determining the rough degree of effort that will be required and what kinds of investments are worth pursuing. Someone trying to make 4%+ per year on their money has a much simpler task than someone trying to make 18%+.
Your answer will depend on what you are trying to achieve and what opportunities and knowledge you possess. Most prominent value investors want a minimum 10% return per year (often they are dealing with larger sums of money, which can make it harder to make higher returns).
This desired rate is what is used as the 'discount rate' when making a 'discounted cashflow' valuation of an asset.
My discount rate is 15%, as my goal is to make 15%+ per year in perpetuity.
You are fallible and the future is unpredictable. It is important to buy assets for significantly less than you think they are worth. The cheaper you buy something, the more margin you have for things to go worse than anticipated. This is called a 'Margin of Safety'. Paying a higher price for something inherently makes the investment more fragile and less profitable.
A crappy business can be a good investment if you get it cheap enough, and a wonderful business can be a terrible investment if you pay too much. (The dream is getting a wonderful business for cheap.)
Minor distractions, impulses, or shifts in attention repeatedly pull us away, forcing creativity to be spent again and again just to re-establish intentional direction.
How is using creativity to re-establish direction distinguished from self-coercing? I'm having trouble seeing the difference.
When an idea has nothing but a code block, there’s too much of a margin at the bottom, between the block and the border of the highlight.
There’s still an issue on ideas#show. When an idea has nothing but a code block, there’s too much of a margin at the bottom, between the block and the border of the highlight.
When the code overflows horizontally, a subtle inset shadow on the side shows that you can scroll:
const posts = [
{id: 1, title: "Understanding JavaScript Closures in Depth", url: "https://example.com/articles/javascript-closures-deep-dive"},
{id: 2, title: "A Complete Guide to Modern Web Development Practices", url: "https://example.com/articles/modern-web-dev-guide"},
{id: 3, title: "Exploring the Node.js Event Loop and Async Patterns", url: "https://example.com/articles/nodejs-event-loop"}
];
function formatPost(post) {
return `${post.id}: ${post.title} -> ${post.url}`;
}
function prettyPrint(posts) {
return posts.map(formatPost).join(" | ");
}
console.log(prettyPrint(posts));
Done as of cc1ab95.
Ruby example:
def criticized? idea
pending_criticisms(idea).any?
end
def pending_criticisms idea
criticisms(idea).filter { |c| pending_criticisms(c).none? }
end
def criticisms idea
children(idea).filter(&:criticism?)
end
JS example (h/t ChatGPT):
function criticized(idea) {
return pendingCriticisms(idea).length > 0;
}
function pendingCriticisms(idea) {
return criticisms(idea).filter(c => pendingCriticisms(c).length === 0);
}
function criticisms(idea) {
return children(idea).filter(c => c.isCriticism);
}
Code blocks need syntax highlighting.
Veritula used to have this feature but I removed it when diffing changed.
Rand writes (p. 161):
The rational (the good) has nothing to gain from the irrational (the evil), except a share of its failures and crimes; the irrational has everything to gain from the rational: a share of its achievements and values. An industrialist does not need the help of a burglar in order to succeed; a burglar needs the industrialist’s achievement in order to exist at all. What collaboration is possible between them and to what end?
…
Consider the case of a business partnership: if one partner is honest and the other is a swindler, the latter contributes nothing to the success of the business; but the reputation of the former disarms the victims and provides the swindler with a wide-scale opportunity which he could not have obtained on his own.
I agree with her message that good shouldn’t collaborate with evil, but I don’t think this example works well. The reason somebody might go into business with a swindler is that they are tempted because the swindler does have something to offer them.
Maybe the swindler has a lot of money and offers to invest. The honest man might be too tempted to pass that up.
I do think the honest man should look for money elsewhere. But in such a case, it’s not true that he had “nothing” to gain from this partnership. It might be more accurate to say that there’s a net loss, or that overall the partnership is not worth it.
As I recall from some of the characters in Atlas Shrugged, Rand knew all this – it might just be a matter of wording things more clearly.
Summary
People are losing their ability to think and act on principles. But they need principles to set long-range goals and make decisions. Without them, people become their own destroyers. Modern philosophy is to blame because it attacks reason.
To stop this suicidal trend, we need to understand the following rules about principles and the relationship between principles and goals:
First, when two men or groups are in conflict while having the same basic principles, the more consistent one will win.
Since they are in conflict, at least one of them must be inconsistent. So the one with the clearer vision of his goal, who more consistently works toward it, will win. The less consistent one just hastens his adversary’s victory and becomes weaker in the process.
This dynamic applies regardless of the merits of their shared principles.
Example: republicans vs democrats. Both agree that the government should interfere with the economy. They just disagree on implementation details. Democrats are more consistently committed to growing government power; the republicans just end up “me-too’ing” them. Recent example.
As a result, government control has been growing over the decades. It will continue to grow until the communists replace socialists and ‘achieve’ “universal immolation”.
This trend can seem inevitable. Some people mistake it for historicism, but it can be reversed by a change of basic principles.
Second, when two men or groups collaborate while having different basic principles, the more evil or irrational one will win.
Mixing opposing basic principles favors bad ones and drives out the good ones. “What is the moral status of an honest man who steals once in a while?”
When good and evil collaborate, it hurts good and helps evil. The good has nothing to gain from evil, while evil stands to gain everything from the good.
Example: collaboration between an honest businessman and a swindler. The swindler does not contribute to the success of the business; the honest man’s reputation ends up luring in more victims than the swindler could have fooled on his own.
Another example: membership of the Soviet Union in the UN. The resulting collaboration between the West and the Soviet Union gave the latter unearned respect, moral sanction, and access to resources. As a result, the Western world has been swallowed by “cynicism, bitterness, hopelessness, fear and nameless guilt…”
Third, defining opposite basic principles clearly and openly helps rationality; hiding or evading them helps irrationality.
The rational side of a conflict wants to be understood. It’s in harmony with reality, so it has nothing to hide. But the irrational side “has to deceive, to confuse, to evade, to hide its goals.”
The good, the rational must be actively upheld; the bad, the irrational is achieved only by default, by not acting. Construction is hard; destruction is easy.
Lessons
Adhere to your principles with consistency.
Never mix opposing basic principles! Leave irrational/evil people to the consequences of their errors.
Be open and transparent; don’t hide things.
Further reading:
@lola-trimble (as I recall) asked, what is an example of a principle? There’s the principle of pronouncing judgment when silence could reasonably be interpreted as sanction of evil: https://courses.aynrand.org/works/how-does-one-lead-a-rational-life-in-an-irrational-society/
@tom-nassis asked, when can you compromise? https://aynrandlexicon.com/lexicon/compromise.html
It is only in regard to concretes or particulars, implementing a mutually accepted basic principle, that one may compromise. For instance, one may bargain with a buyer over the price one wants to receive for one's product, and agree on a sum somewhere between one's demand and his offer. The mutually accepted basic principle, in such case, is the principle of trade, namely: that the buyer must pay the seller for his product. But if one wanted to be paid and the alleged buyer wanted to obtain one's product for nothing, no compromise, agreement or discussion would be possible, only the total surrender of one or the other.
There can be no compromise between a property owner and a burglar; offering the burglar a single teaspoon of one's silverware would not be a compromise, but a total surrender—the recognition of his right to one's property.
Summary
People are losing their ability to think and act on principles. But they need principles to set long-range goals and make decisions. Without them, people become their own destroyers. Modern philosophy is to blame because it attacks reason.
To stop this suicidal trend, we need to understand the following rules about principles and the relationship between principles and goals:
First, when two men or groups are in conflict while having the same basic principles, the more consistent one will win.
Since they are in conflict, at least one of them must be inconsistent. So the one with the clearer vision of his goal, who more consistently works toward it, will win. The less consistent one just hastens his adversary’s victory and becomes weaker in the process.
This dynamic applies regardless of the merits of their shared principles.
Example: republicans vs democrats. Both agree that the government should interfere with the economy. They just disagree on implementation details. Democrats are more consistently committed to growing government power; the republicans just end up “me-too’ing” them. Recent example.
As a result, government control has been growing over the decades. It will continue to grow until the communists replace socialists and ‘achieve’ “universal immolation”.
This trend can seem inevitable. Some people mistake it for historicism, but it can be reversed by a change of basic principles.
Second, when two men or groups collaborate while having different basic principles, the more evil or irrational one will win.
Mixing opposing basic principles favors bad ones and drives out the good ones. “What is the moral status of an honest man who steals once in a while?”
When good and evil collaborate, it hurts good and helps evil. The good has nothing to gain from evil, while evil stands to gain everything from the good.
Example: collaboration between an honest businessman and a swindler. The swindler does not contribute to the success of the business; the honest man’s reputation ends up luring in more victims than the swindler could have fooled on his own.
Another example: membership of the Soviet Union in the UN. The resulting collaboration between the West and the Soviet Union gave the latter unearned respect, moral sanction, and access to resources. As a result, the Western world has been swallowed by “cynicism, bitterness, hopelessness, fear and nameless guilt…”
Third, defining opposite basic principles clearly and openly helps rationality; hiding or evading them helps irrationality.
The rational side of a conflict wants to be understood. It’s in harmony with reality, so it has nothing to hide. But the irrational side “has to deceive, to confuse, to evade, to hide its goals.”
The good, the rational must be actively upheld; the bad, the irrational is achieved only by default, by not acting. Construction is hard; destruction is easy.
Lessons
Adhere to your principles with consistency.
Never mix opposing basic principles! Leave irrational/evil people to the consequences of their errors.
Be open and transparent; don’t hide things.
Prevailing explanations tend to put emphasis on the object instead of problem situations, like thinking addiction comes from the cigarette. This theory doesn't.
Prevailing explanations tend to put emphasis on the object instead of problem situations, like thinking addiction comes from the cigarette. This theory doesn't.
Prevailing explanations tend to put emphasis on the object instead of problem situations, like thinking addiction comes from the cigarette. This theory doesn't.
A criticism that I often hear when people try to live by their principles is something along the lines of "you think you're better than us?" This kind of criticism has often stopped people from defending and living by their principles, especially if they have been seen violating their own principles.
A defense against this is that if someone continually brings up past mistakes in order to hang them over another person, then it might be in that person's best interest to end the relationship. Give warnings, and be clear, but if no change is observed, one has the right and the obligation to end the relationship. And as for being better than others, I view it as another form of wealth. Some people are better than others financially. But that isn't because "that's who they are" or "born that way" or "got lucky." It was because they had the skills to make money. Being in a better place morally is both possible and desirable.
Summary
People are losing their ability to think and act on principles. But they need principles to set long-range goals and make decisions. Without them, people become their own destroyers. Modern philosophy is to blame because it attacks reason.
To stop this suicidal trend, we need to understand the following rules about principles and the relationship between principles and goals:
First, when two men or groups are in conflict while having the same basic principles, the more consistent one will win.
Since they are in conflict, at least one of them must be inconsistent. So the one with the clearer vision of his goal, who more consistently works toward it, will win. The less consistent one just hastens his adversary’s victory and becomes weaker in the process.
This dynamic applies regardless of the merits of their shared principles.
Example: republicans vs democrats. Both agree that the government should interfere with the economy. They just disagree on implementation details. Democrats are more consistently committed to growing government power; the republicans just end up “me-too’ing” them. Recent example.
As a result, government control has been growing over the decades. It will continue to grow until the communists replace socialists and ‘achieve’ “universal immolation”.
This trend can seem inevitable. Some people mistake it for historicism, but it can be reversed by a change of basic principles.
Second, when two men or groups collaborate while having different basic principles, the more evil or irrational one will win.
Mixing opposing basic principles favors bad ones and drives out the good ones. “What is the moral status of an honest man who steals once in a while?”
When good and evil collaborate, it hurts good and helps evil. The good has nothing to gain from evil, while evil stands to gain everything from the good.
Example: collaboration between an honest businessman and a swindler. The swindler does not contribute to the success of the business; the honest one’s reputation ends up luring in more victims than the swindler could have fooled on his own.
Another example: membership of the Soviet Union in the UN. The resulting collaboration between the West and the Soviet Union gave the latter unearned respect, moral sanction, and access to resources. In exchange, the Western world has been swallowed by “cynicism, bitterness, hopelessness, fear and nameless guilt…”
Third, defining opposite basic principles clearly and openly helps rationality; hiding or evading them helps irrationality.
The rational side of a conflict wants to be understood. It’s in harmony with reality, so it has nothing to hide. But the irrational side “has to deceive, to confuse, to evade, to hide its goals.”
The good, the rational must be actively upheld; the bad, the irrational is achieved only by default, by not acting. Construction is hard; destruction is easy.
Lessons
Adhere to your principles with consistency.
Never mix opposing basic principles! Leave irrational/evil people to the consequences of their errors.
Be open and transparent; don’t hide things.
Summary
People are losing their ability to think and act on principles. But they need principles to set long-range goals and make decisions. Without them, people become their own destroyers. Modern philosophy is to blame because it attacks reason.
To stop this suicidal trend, we need to understand the following rules about principles and the relationship between principles and goals:
First, when two men or groups are in conflict while having the same basic principles, the more consistent one will win.
Since they are in conflict, at least one of them must be inconsistent. So the one with the clearer vision of his goal, who more consistently works toward it, will win. The less consistent one just hastens his adversary’s victory and becomes weaker in the process.
This dynamic applies regardless of the merits of their shared principles.
Example: republicans vs democrats. Both agree that the government should interfere with the economy. They just disagree on implementation details. Democrats are more consistently committed to growing government power; the republicans just end up “me-too’ing” them. Recent example.
As a result, government control has been growing over the decades. It will continue to grow until the communists replace socialists and ‘achieve’ “universal immolation”.
This trend can seem inevitable. Some people mistake it for historicism, but it can be reversed by a change of basic principles.
Second, when two men or groups collaborate while having different basic principles, the more evil or irrational one will win.
Mixing opposing basic principles favors bad ones and drives out the good ones. “What is the moral status of an honest man who steals once in a while?”
When good and evil collaborate, it hurts good and helps evil. The good has nothing to gain from evil, while evil stands to gain everything from the good.
Example: collaboration between an honest businessman and a swindler. The swindler does not contribute to the success of the business; the honest one’s reputation ends up luring in more victims than the swindler could have fooled on his own.
Another example: membership of the Soviet Union in the UN. The resulting collaboration between the West and the Soviet Union gave the latter unearned respect, moral sanction, and access to resources. In exchange, the Western world has been swallowed by “cynicism, bitterness, hopelessness, fear and nameless guilt…”
Third, defining opposite basic principles clearly and openly helps rationality; hiding or evading them helps irrationality.
The rational side of a conflict wants to be understood. It’s in harmony with reality, so it has nothing to hide. But the irrational side “has to deceive, to confuse, to evade, to hide its goals.”
The good, the rational must be actively upheld; the bad, the irrational is achieved only by default, by not acting. Construction is hard; destruction is easy.
Lesson
Never mix opposing basic principles! Leave irrational/evil people to the consequences of their errors.