Today, I’m doing something I don’t take lightly: I am opening up the hood and sharing my personal watchlist of roughly 150 global, above-average companies that I’ve meticulously curated over the last few years.
These aren’t speculative flyers or trending meme stocks. These are mostly very high-quality businesses that I deeply understand.
My entire investing philosophy rests on a simple premise: if I can identify these compounders early, wait patiently for the right entry price, and buy them with a comfortable margin of safety, I can later simply sit on my hands for multiple years and let the intrinsic compounding of the business do the heavy lifting for me.
Speaking of simplicity, I recently shared a quote on X that I wrongly attributed to the late, great Charlie Munger:
“If all you ever did was buy high-quality stocks on the 200-week moving average, you would beat the S&P 500 by a large margin over time.”
While I botched the author (I did actually try to verify it at the time of posting and found some confirming evidence; which turned out to be wrong), I still believe the core concept expressed is fundamentally sound, and Munger might actually underwrite it.
Munger was the absolute master of simplicity, and we don’t need to overcomplicate things in order to outperform.
“The reason our ideas haven’t spread faster is they’re too simple.” - Charlie Munger
"Everything should be made as simple as possible, but not simpler." - Albert Einstein
In fact, a friend recently pointed out another incredibly straightforward approach similar to this one to me, and I wanted to share it here as well. He said, if you had a spreadsheet with all the stocks in your investable universe (your watchlist) and added a column to it that simply asks:
Is this (super high-quality) stock currently in a “lost decade”? Yes/No.
And if you’d only ever consider buying these stocks after a lost decade, when no one wants to touch them, but the long-term thesis is still intact – 1-2 transactions a year –, you’d likely crush the market.
When it comes to hunting for true variant perception – finding situations where the market’s current narrative diverges wildly from long-term reality –, when you’re hunting for areas where you could truly find an edge (remember, skill alone is not enough), this column might be a fertile hunting ground.
The logic of this philosophy is simple; yet arguably the hard part is having the absolute discipline to only swing when these outlier opportunities present themselves. Yet, from my experience (me included), most investors have a (very strong) action bias.
There are, of course, a million ways to beat the market (not only quality investing), and I believe successful investing is all about finding a style that matches your psychology.
But perhaps the most elegant and effective way to outperform – and the way that takes the least psychological toll – is to build a high-quality list, track it relentlessly, and wait. Wait for the no-brainers. Then swing. And do nothing. Do nothing for a long time.
When you track over 100 benchmark-beating companies, I can guarantee you that every single year a handful of them will experience a massive drawdown. Sometimes the company is navigating a temporary operational hiccup; sometimes the entire industry is cyclically out of favor; other times, the broader macro market simply tanks. If you can zoom out, look past the short-term noise, and confidently conclude that the core business is intact and the problem is fixable in a reasonable timeframe, that is your cue to swing hard.
“A wishlist allows you to make more informed, well-timed investment decisions. It gives you an advantage because you can capitalize on sudden price drops more quickly than lazier investors who only start their research after the damage is already done.” - from my investment framework
When a market panic hits, you don’t want to start reading a 10-K from scratch. You want to grab your pre-vetted wishlist with stocks you’d love to own at the right price, and immediately see which compounders have dropped into your buy zone. Yes, the Efficient Market Hypothesis claims that a stock’s price always equals its value. And I believe this is a directionally right assessment. However, – and this is where I disagree – while the market is incredibly efficient most of the time, at any single point in time, emotions might cause prices to deviate wildly from intrinsic values.
Additionally, expanding your own watchlist – one stock at a time – and continuously researching different businesses has massive compounding benefits for your own intellect. Warren Buffett famously refers to this as building a “mental database.” By becoming intimately familiar with dozens of different business models and industries today, you radically speed up your ability to analyze similar companies or competitive threats in the future.
Of course, even if you’ve established that 100+ stock mental data base, I believe you should always be open to looking at new ideas. But a 100 high-quality stock universe may be enough to outperform the market. And it’s a great foundation too.
Furthermore, to keep this database sharp, you have to ruthlessly curate it. While putting this post together, I did exactly that: I revised the list and purged what no longer fit.
Finally, your ballpark “margin of safety entry prices” shouldn’t be set in stone. Because new data constantly flows in, a firm’s intrinsic value changes constantly too, meaning you should review and update your target prices periodically – I find an annual review might be the sweet spot. Real business change takes a long time to play out, which means your structural analysis is highly durable, especially for high-quality businesses operating in industries with ideally slow rates of change. Unless a black swan corporate event occurs, revising your ideas once a year will absolutely do the job.
However, this also means you want to cap your watchlist at a certain point, because otherwise this whole process becomes unmanageable.
What We Will Cover in This Post
In this post, I’m going to share the handpicked 150 high-quality stocks in my investable universe (strictly speaking, after some cleanup, I ended up with 148 names). First, I will present the complete watchlist alongside a highly concise, 1-2 sentence breakdown of what each business does and where it operates. Next, we will run a structural analysis on the list – looking at its collective current performance, underlying industry clusters, long-term topline CAGRs, margins, and overall valuation metrics. Finally, we will discuss how to actually put this list to work in your daily routine, going far beyond a lazy “52-week low” screening approach to find true, mispriced value. I hope you enjoy this piece.
Disclaimer: As of the date of publication the author owns shares in some of the names that appear on the watchlist. The analysis presented in this blog may be flawed and/or critical information may have been overlooked. The content provided should be considered an educational resource and should not be construed as individualized investment advice, nor as a recommendation to buy or sell specific securities. I may own some of the securities discussed. The stocks, funds, and assets discussed are examples only and may not be appropriate for your individual circumstances. It is the responsibility of the reader to do their own due diligence before investing in any index fund, ETF, asset, or stock mentioned or before making any sell decisions. Also double-check if the comments made are accurate. You should always consult with a financial advisor before purchasing a specific stock and making decisions regarding your portfolio.