Investment Glossary

A competitive moat — or economic moat — is the structural barrier that protects a company's profits and market position from erosion by competitors. The term, popularised by Warren Buffett, describes any durable advantage that makes it difficult for rivals to replicate what a company does.

The cost advantage that arises from increasing the scale of production or operation — per-unit costs decrease as total output increases. A structural moat when scale creates durable cost leadership.

A market condition where customers face prohibitive costs or friction when attempting to switch to a competing product or service. Lock-in converts competitive position into durable structural advantage.

Market positioning describes where a company stands in its competitive landscape relative to peers — how it differentiates, what customers it targets, and how it creates value in a way that rivals struggle to replicate. In the L17X framework, structural positioning is the foundation of the PM Role assignment.

A competitive dynamic where each additional user makes the product or service more valuable for all existing users, creating a self-reinforcing cycle of adoption. Network effects are widely considered the strongest type of competitive moat.

The risk arising from material dependency on another company's platform, technology, distribution channel, or regulatory framework. Platform risk is the structural vulnerability at the core of the Dependent role in Power Mapping.

Sector rotation is the pattern by which investment capital flows from one industry sector to another across different phases of the economic cycle. Different sectors tend to outperform at different stages of the cycle — understanding this can inform portfolio positioning.

The structural friction — financial, operational, or psychological — that makes it costly or difficult for customers to change providers. High switching costs are a central element of many Power Cores in the L17X framework.