📖David Swensen
Business Moat Assessment
Identify sustainable competitive moats before investing.
Before investing, identify the moat — the sustainable competitive advantage that protects the business from competitors. No moat means no long-term edge.
🏠 Everyday Analogy
📖 Core Interpretation
David Swensen emphasizes durable business quality over short-term noise. A strong model, real competitive edge, and disciplined capital allocation matter more than quarterly excitement.
💎 Key Insight：Moats protect earnings from competitive erosion.
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❓ Why It Matters
Without business-quality filters, investors drift toward stories rather than economics. Durable cash generation is what supports long-term valuation.
🎯 How to Practice
Use a checklist covering moat, management, unit economics, and capital allocation; track long-term cash generation instead of quarter-to-quarter noise.
⚠️ Common Pitfalls
Buying narratives instead of cash-generating economics
Overreacting to short-term operating noise
Ignoring management quality and capital allocation
📚 Case Studies
1
Global Financial Crisis (2008)
As equities and illiquid assets plunged, Swensen’s disciplined rebalancing shifted funds from Treasuries and bonds back into depressed equities and alternative assets despite market panic.
✨ Outcome：Positioned the endowment for strong post-2009 recovery, outperforming many peers that de-risked near the bottom.
2
Tech Bubble Resistance (2000)
Amid the dot-com boom, Swensen refused to chase soaring tech stocks, keeping Yale’s portfolio diversified and underweight in high-flying internet names.
✨ Outcome：Avoided the worst of the 2000–2002 crash, preserving capital while many tech-heavy portfolios suffered steep losses.
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