📖Duan Yongping
Understand the Business Moat
Only invest in businesses you truly understand with lasting competitive advantages.
Only invest in businesses you truly understand and that have sustainable competitive advantages. If you can't explain the moat in simple terms, you don't understand the business.
🏠 Everyday Analogy
📖 Core Interpretation
Deep understanding of competitive advantage is prerequisite for investment
💎 Key Insight：Duan follows Buffett circle of competence principle. He invests only in industries and companies he deeply understands—consumer electronics, internet platforms—where he can assess competitive moats, management quality, and long-term prospects. Businesses with durable advantages (brand, network effects, switching costs) can sustain high returns over decades. Complexity and uncertainty are signals to avoid an investment.
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❓ Why It Matters
Duan only invests in a handful of companies he deeply understands like Apple
🎯 How to Practice
Study the business until you can explain its moat to a child
🎙️ Master's Voice
The right thing to do is more important than doing things right.
Duan distinguishes between strategic direction and tactical execution. It is more important to choose the right path than to execute perfectly on the wrong path. Direction trumps speed.
⚔️ Practical Guide
✅ Decision Checklist
- Am I doing the right thing?
- Is my direction correct?
- Should I reconsider my path?
📋 Action Steps
- Prioritize strategic direction over tactical execution
- Regularly question if you are on the right path
- Be willing to change direction entirely
🚨 Warning Signs
- Perfect execution on wrong strategy
- Never questioning direction
- Optimizing the wrong thing
⚠️ Common Pitfalls
Buying narratives instead of cash-generating economics
Overreacting to short-term operating noise
Ignoring management quality and capital allocation
📚 Case Studies
1
Investment in NetEase (2005)
Duan Yongping recognized NetEase’s strong gaming ecosystem and loyal user base as a durable moat and invested heavily when the market doubted its sustainability.
✨ Outcome：NetEase’s profits and market share grew significantly, and the stock multiplied over the next decade.
2
Backing Tencent Early (2007)
Seeing Tencent’s network effects, user stickiness, and high switching costs in QQ and early WeChat, Duan considered its social and gaming ecosystem a powerful moat and accumulated shares.
✨ Outcome：Tencent became one of China’s most valuable tech companies, delivering multibagger returns over many years.
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