Five questions before a name stays on your watchlist

Watchlists accumulate names the way drawers accumulate cables. A ticker enters after a tip, a conference, or a single strong quarter — then stays because removing it feels like admitting a mistake.

Before any name keeps its seat for another quarter, we ask clients to answer five questions in writing:

1. What must be true for this equity to deserve capital in the next twelve months? If the answer is only “the chart looks constructive,” the thesis is incomplete.
2. Which filing line would break the thesis first? Margin, leverage, customer concentration, or related-party growth — name it.
3. How liquid is an exit if the thesis fails? Thin order books change how large a position should ever become.
4. What peer is clearly better on the same criteria? If you cannot name one, you may not understand the peer set.
5. Would you buy the first lot again at today’s price? Hesitation here is information.

In our Watchlist Review sessions, names that fail two or more of these questions are usually parked or cut. The exercise is intentionally uncomfortable. Lists that never shrink are not research tools — they are scrapbooks.