The Little Book That Builds Wealth
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The Little Book That Builds Wealth

Pat Dorsey

4.51017 learners

In Pat Dorsey’s The Little Book That Builds Wealth, you’ll uncover the cornerstone of successful value investing: identifying companies with "economic moats"—structural competitive advantages that shield them from rivals and sustain above-average profits for decades. Dorsey clarifies the critical difference between real, durable moats and misleading short-term wins like trendy products or high market share, then breaks down the four core sources of lasting moats: intangible assets (brands, patents, regulatory licenses), high customer switching costs, network effects, and cost/scale advantages. He also teaches readers to spot warning signs of moat erosion, from technological disruption to poor capital allocation, and maps which industries are most likely to harbor wide moats (media, finance, software) versus those that rarely do (consumer services, industrial materials). With practical metrics like return on invested capital to validate moats, actionable valuation techniques, and clear sell strategies, this book equips investors to avoid value traps and build a resilient portfolio of wealth-generating stocks that outperform over the long haul.

Competitive AdvantageNetwork EffectsFree Cash FlowEconomic MoatSwitching Costs
Concept

Second Unbundling

Baldwin's Second Unbundling: Communication cost drops let global production split into stages. Companies move low-skill tasks to cheap labor countries, keeping high-value (design/marketing) at home.

GlobalizationProduction SplitIntangibles
Concept

Smile Curve

The Smile Curve shows value in global chains: high at design (left) and marketing (right), low at manufacturing (middle). Companies with intangibles (brands, algorithms) capture most profit.

IntangiblesGlobal Value ChainValue Distribution
Concept

Intangible Assets

Intangible assets are non-physical (code, data, algorithms) with non-rivalry (use doesn't deplete) and scalability (low marginal cost). They're the core of digital rent extraction.

IntangiblesRentDigital Economy
Concept

Cognitive-Cultural Capitalism

Late modern capitalism focuses on intangibles (patents, brand, knowledge). Products need cultural value (identity, experience) to succeed, creating winner-takes-all markets.

Post-IndustrialCapitalismIntangible Assets
Insight

Modern War Is Unprofitable

Today's economy relies on intangible assets (knowledge, tech) that can't be looted. War now destroys more than it gains—nuclear and cyber war risk mutual destruction.

GlobalizationEconomyWar
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