- Pat Dorsey's Little Book That Builds Wealth is the ultimate guide to understanding economic moats
- More than a decade from its publishing, investors can learn a lot
Investing is hard. As with other pursuits, it can be helpful to be guided by a few tested rules of thumb. Writers, for example, often rely on George Orwell’s famous six rules. We are told to replace long words when short words will suffice, and to avoid jargon. Some investors may well agree with Orwell’s fourth rule, in particular: “Never use the passive when you can use the active”.
It’s unfair to directly liken Pat Dorsey’s The Little Book That Builds Wealth to a short shopping list of tips. In his book, Mr Dorsey, who runs an eponymous asset management firm in the US, sets out four kinds of ‘economic moat’, as well as identifying mistaken moats and explaining valuation techniques. Much has changed for the companies within this book, such as Microsoft (US:MSFT), since it was first published in 2008. But its simplicity and brevity give it its own edge over other investment tomes.