📖Jeremy Grantham
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
Jeremy Grantham 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
U.S. Housing and Credit Bubble (2007)
Grantham highlighted extreme overvaluation in U.S. housing and risk assets, cutting exposure to equities and credit pre-crisis.
✨ Outcome：GMO avoided the worst of the 2008 collapse and then added risk as spreads and equity valuations reverted toward historical averages.
2
Dot-Com Bubble Warning (2000)
Grantham publicly warned in 1998–2000 that tech stocks were in a massive bubble, reducing GMO client exposure to overvalued growth and internet shares.
✨ Outcome：Clients underperformed during the final surge, but avoided most of the 2000–2002 crash and preserved substantial capital.
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