“If you want to shoot rare, fast-moving elephants,
you should always carry a loaded gun.”
I have been thinking for some time about putting together a watch list where I can keep track of current or potential investments. A watch list to act as a “loaded gun”, so to speak, to help me as an investor catch any “rare, fast-moving elephants.”
In the great book The Manual of Ideas: The Proven Framework for Finding the Best Value Investments the author briefly discusses how to use a watch list to keep track of current and potential investments.
“Ideally, we not only compile and grow the watch list over time but also track the estimated discount between intrinsic value and the market price. When the discount reaches a historically wide level, we may do the analytical work required to make an investment decision.” (p. 78)
Also, on the Manual of Ideas homepage in the article titled Wide-Moat Imposters and The Search for Great Businesses the discussing the use of watch lists as follows.
“(Those) who seek to invest in great businesses at reasonable prices have built up watch lists of such businesses, tracking the width of their competitive moats over time. This is not a quantitative process but rather a matter of ongoing judgment. Buffett must have felt the monopolistic pricing power of local newspapers start to erode quite a bit before their financials removed any doubt that major changes were afoot in the media landscape. Similarly, those who have followed cable operators for a long time must be growing ever more concerned about the evolution of their competitive position vis-à-vis Internet-based video. On the other hand, investors who have followed U.S. railroads for a long time probably started seeing major improvement in railway economics quite a bit before the rest of the investment community caught on. As such, an investment process that relies on knowledge accumulation over time can deliver an edge in judgment at key inflection points in the attractiveness of certain companies or industries. Such an edge may be less available to those who focus on screening-based deep value approaches.”
The watch list can be found here, and will be updated continuously.