5. Commodity Reliance
- You might initially think of this question as a radical approach to narrowing down a company. Buffett, however, sees this question as an important one.
- He tends to shy away (but not always) from companies whose products are indistinguishable from those of competitors, and those that rely solely on a commodity such as oil and gas .
- If the company does not offer anything different from another firm within the same industry, Buffett sees little that sets the company apart.
- Any characteristic that is hard to replicate is what Buffett calls a company's economic moat, or competitive advantage.
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