My investing strategy has two stages. The first is to identify a watchlist of the highest quality businesses I can find. This takes advantage of the ‘big idea’ underpinning my strategy – that I can identify high quality businesses that are likely to be materially undervalued when their long term growth is properly accounted for. The second stage is to trade the businesses on the watchlist based on their current momentum, valuation and news flow.

In practice, it’s been the first stage rather than the second which has delivered most of the returns. This is demonstrated by the strong relative performance of my benchmark buy and hold portfolio, which simply holds all of the shares on my watchlist for the long term. My approach to the second stage is less clearly defined and has evolved over time as I have experimented with different approaches. If I want to improve my results, I think this is what I need to focus on.