Since I last wrote What’s Your Valuation? I begun thinking deeper and started getting more inspirations to continue to write on the idea that we should view ourselves as assets as well, and not just stocks. This led me to think about how to better improve myself. Previously I wrote about how must focus on our intangible assets instead of valuing ourselves simply based on how big our paycheck is or the size of our bank account.
I begun thinking about my future. If I were a stock, would I invest in myself? We know that there are several factors to consider before investing in a stock. One of the most talked about and critical factor to a business’ success is having an Economic Moat.
An Economic Moat is essentially the competitive advantage that a business possesses to keep competitors away and enjoy the supernormal profits. While considering the advantages of having a moat, we need to remember to focus on TWO aspects of the moat.
Firstly being the depth of the moat – How much value can we maximise out of our strengths that we as individuals possess. Everyone has a unique strength that they can profit from. You simply need to find it and utilise it well. The deeper it is, the more we can profit out of it. So carve out your specialty and sharpen it that it becomes extremely valuable to someone else that they will pay you top dollars for it!
Secondly, the width of the moat – How can we keep our competitors out for a long duration of time! When our competitors see that it becomes profitable to copy the same methods we employ, they will do it as well. And we can’t stop them, unless our moat is wide enough to keep them out. The bigger the gap we can create ourselves from our competitors, the longer we get to enjoy the benefits of our competitive advantage!
While we constantly focus on economic moats when we decide on our investments, have we failed to create an economic moat for ourselves as well? Where are our areas of strength that we can maximise that can lead to profitability and a way to keep our competitors from trying to steal a slice of our delicious pie?
As investors, we emphasise on the importance of a business having a durable competitive advantage to remain profitable for many years. On a similar comparison, I don’t see many people creating the moat in their lives as much as we hope to see it in companies that we invest in. If we were stocks, would we invest in ourselves?
Are we practicing what we preach?