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Charlie Munger

Charlie Munger 200 Weekly MA Entry

Scan 5,000+ stocks daily for Munger-style 200-week MA value entries. Quality businesses near long-term fair value with ROE and margin scoring. Each setup graded A+ to B.

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What is this pattern?

The Charlie Munger 200-week moving average strategy embodies the intersection of value investing and technical analysis. Charlie Munger, Warren Buffett's legendary partner at Berkshire Hathaway, championed the idea that investors should focus on wonderful businesses purchased at fair prices rather than chasing cheap stocks of mediocre companies. The 200-week moving average serves as a long-term fair value anchor for high-quality businesses.

The 200-week MA represents approximately four years of average prices — enough time to smooth out business cycles, temporary earnings disruptions, and market sentiment swings. For a high-quality company with durable competitive advantages, a pullback to this level typically represents a rare opportunity to buy a proven compounder at a historically reasonable price.

What makes this scanner unique is the combination of fundamental quality screening with the technical entry signal. The scanner first identifies businesses that meet Munger's quality criteria — high return on equity sustained over many years, stable and expanding profit margins, low debt levels, and predictable earnings. Only then does it check whether the stock is trading near its 200-week MA. This dual filter ensures you are not just buying any stock near a moving average, but specifically targeting world-class businesses at moments of temporary market pessimism.

Origin & History

Inspired by the investment philosophy of Charlie Munger, Warren Buffett's partner at Berkshire Hathaway for over five decades. Munger's emphasis on buying wonderful businesses at fair prices was articulated throughout his career, notably in Poor Charlie's Almanack (2005). The 200-week moving average as a fair value anchor for quality businesses was developed by institutional portfolio managers who sought to quantify Munger's qualitative framework into an actionable entry signal.

Detection Criteria

Our scanner evaluates the following criteria when detecting Charlie Munger 200 Weekly MA Entry setups across 5,000+ stocks daily.

Price within 5% of 200-week moving average
The 200-week MA represents approximately 4 years of average prices — a true long-term fair value anchor. Proximity to this level suggests the stock is near fair value.
Return on equity above 12% consistently
Consistently high ROE is the fingerprint of a durable competitive advantage. It means the business earns strong returns on shareholder capital year after year.
Earnings growth over trailing 5-year period
Five-year earnings growth confirms the business is compounding value, not just maintaining stagnant profits. Growing earnings drive long-term stock price appreciation.
Gross margin stability (low variance)
Stable margins indicate pricing power and competitive protection. Volatile margins suggest the business faces intense competition or commodity pricing pressure.
Price-to-earnings vs sector median
Comparing valuation to the sector median ensures you are not overpaying relative to peers, even if the stock appears cheap on an absolute basis.

Grading Breakdown

For Munger entries, an A+ grade means a high-quality business (ROE above 15%, stable margins) trading within 5% of its 200-week moving average with consistent earnings growth and low debt. This is not a prediction of future price movement — it is a way to prioritize which charts deserve your attention first.

A+
Textbook setup — strong confluence across all criteria. Highest conviction.
A
High-quality setup worth watching closely. Minor criteria may be slightly off.
B+
Decent setup with some reservations. One or two criteria fall short of ideal.
B
Pattern detected but lower conviction. Use as a watchlist candidate, not a trade trigger.

Common Mistakes to Avoid

Buying low-quality stocks just because they're near the 200-week MA — the strategy requires high ROE, stable margins, and earnings consistency first
Ignoring the reason for the pullback — a quality business near its 200-week MA due to a temporary market correction is very different from one declining due to fundamental deterioration
Being impatient — Munger-style value investments often take quarters or years to play out; expecting immediate results misses the point of the approach

How to Trade This Pattern

Entry

Buy when a quality business (ROE above 15%, stable margins) touches or dips below its 200-week MA. Look for signs of stabilization — a weekly hammer candle, volume dry-up, or RSI divergence at the level.

Stop Loss

Place a wide stop 10-15% below the 200-week MA. Munger-style investments require patience and a wider risk tolerance — these are long-term positions, not swing trades.

Price Target

The target is a return to historical valuation norms — typically the 50-week MA or higher. Many Munger-style entries at the 200-week MA produce 30-50% returns over 1-3 years as the stock reverts to its quality premium.

This is educational content only. Not financial advice. Always do your own research and manage risk appropriately.

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AskLivermore scans 5,000+ NASDAQ and NYSE stocks daily · Not financial advice · Past performance does not guarantee future results