Building a Watchlist
You've found interesting stocks. Now what? A watchlist helps you track candidates until you're ready to act.
What Is a Watchlist?
A curated list of stocks you're:
- Interested in but not ready to buy
- Monitoring for better entry points
- Researching further
- Considering for future purchase
The Shopping List
Before grocery shopping, you make a list of items you need. You don't buy everything immediately—you wait for sales, check quality, compare options.
A stock watchlist works the same way. You identify candidates, then wait for the right moment to "buy."
Why Keep a Watchlist?
1. Preparation
- Research before you need to act
- Be ready when opportunities arise
- Avoid rushed decisions
2. Patience
- Wait for better prices
- Monitor for improving fundamentals
- Don't chase stocks
3. Organization
- Track multiple candidates
- Compare alternatives
- Prioritize your research
4. Discipline
- Avoid impulse buying
- Stick to your criteria
- Make deliberate decisions
Key Takeaways
- Watchlists track stocks you're interested in
- They help you prepare and stay patient
- Good watchlists are curated, not cluttered
- Review and update regularly
Building an Effective Watchlist
What to Include
High-Priority Candidates:
- Stocks you'd buy today at the right price
- Strong scores across all pillars
- Businesses you understand
Research Candidates:
- Interesting but need more analysis
- One concern to investigate
- Potential but uncertain
Sector Representatives:
- Top 1-2 stocks per sector you follow
- For diversification opportunities
- Sector rotation candidates
What NOT to Include
❌ Every stock you've ever looked at ❌ Stocks you don't understand ❌ Stocks with major red flags ❌ Stocks you'll never actually buy
Watchlist Best Practices
Keep It Manageable
- 15-30 stocks maximum
- Quality over quantity
- Remove stocks that no longer qualify
Organize by Category
- By sector
- By priority (ready to buy vs. researching)
- By strategy (growth vs. value vs. income)
Add Notes
- Why you added it
- What you're waiting for
- Key concerns to monitor
Review Regularly
- Weekly: Check scores and news
- Monthly: Prune and update
- Quarterly: Major reassessment
The 3-Bucket System
Organize your watchlist into buckets:
Bucket 1: Ready to Buy
- Would buy today at current price
- Just waiting for cash or portfolio space
Bucket 2: Watching for Entry
- Like the stock but want better price
- Monitoring for score improvement
Bucket 3: Research Needed
- Interesting but need more analysis
- Questions to answer before promoting
From Watchlist to Purchase
When to Buy from Watchlist
✅ Score improves — Stock becomes more attractive ✅ Price drops — Better entry point ✅ Research complete — You understand it fully ✅ Portfolio fit — You have room and it diversifies ✅ Catalyst appears — Reason to act now
When to Remove from Watchlist
❌ Scores deteriorate — No longer attractive ❌ Thesis breaks — Fundamental change ❌ Better alternative — Found something superior ❌ Lost interest — No longer fits your strategy ❌ Too long on list — If 6+ months, reassess
Watchlist Workflow
Weekly Routine (15 minutes)
- Check scores on watchlist stocks
- Note any significant changes
- Read headlines for watchlist names
- Identify any ready to buy
Monthly Routine (30 minutes)
- Review full watchlist
- Remove stocks that no longer qualify
- Add new candidates from leaderboards
- Update notes and priorities
Watchlist Traps
- Letting watchlist grow too large
- Never actually buying (analysis paralysis)
- Not removing stocks that deteriorate
- Forgetting why you added a stock
Next up: Screening strategies—systematic approaches to finding stocks.