In response to U.S. tariffs, the market saw its biggest one-day loss since the March 2020 Covid-19 selloff. Over $2.4 trillion of market value was wiped out from the S&P 500.
“If you’re in the market, you have to know there’s going to be declines.”
— Peter Lynch
The reality is that nobody has a crystal ball 🔮 to say what’s going to happen tomorrow. The 📺 Nonsense News will scare us with short-term noise, but as Peter Lynch reminds us: ups & downs are part of the long-term investing game.
When we zoom out, a simple picture emerges: long-term compounding wins through booms, busts, wars, pandemics, inflation, deflations, and more.
We just released a beta version of the Backtester feature for 🔍 ValueGlance.com where you can test strategies over the past 35 years. Let’s take a long-term perspective.
🖨️💵 High Quality Wins Through Thick & Thin
In 📖 “Stop Checking The Price!” we learned how to find high-quality, money-printing stocks. These companies create long-term value when their return on capital is higher than their cost of capital.
Let’s test a super simple Quality Screener. This screener filters ROIC above 20% and filters by market cap above $100 million. The portfolio is constructed by applying the filter every quarter and selecting 30 random stocks that satisfy the filtering conditions. This is repeated up to present day. Below are the results of the Quality Screener (brown) and the S&P 500 Index (blue) going back to 1990.
The S&P 500 index grew at 8.5% CAGR which turned $1 into about $17 after 35 years — not bad.
Our Quality Screener grew at 16.7% CAGR — nearly double the market’s rate of compounding! Over the same 35 years that turned $1 into over $225.
While it is easy to get caught up in the 📺 Nonsense News narratives — especially on a day like today with tariffs and heightening uncertainty — when we zoom out, we see a simple picture: high-quality stocks win through market booms & busts.
Maintain a Compound Mindset and focus on the long game.
🔍 Looking for deep value stocks to buy the dip?
Want the tool that makes it easier than ever to find high-quality stocks in deep value territory? Check out 🔍 ValueGlance.com to visualize long-term trends rather than short-term hype!
📖 Want to learn the high-quality stock strategy?
Want to learn the simple strategy to find high-quality, value-creating, money-printing stocks? Get a copy of 📖 “Stop Checking The Price!” on Amazon!