Title: Quality always wins Show: Compounding Quality (Substack, paid post — compoundingquality.net) Guest: Pieter Slegers (author) Date: 2026-07-14 URL: https://www.compoundingquality.net/p/quality-is-for-the-long-term Length: written post — no timestamps Note: Paid-subscriber post captured via Stephen's logged-in session. Body text verbatim; UI chrome removed. Charts noted inline as [Image — …]. Published under the slug /p/quality-is-for-the-long-term with the on-page title "Quality always wins".
Hi Partner 👋
Someone recently called us 'stupid' for investing in quality stocks.
They said we're missing a bull market that's creating intergenerational wealth.
Let me be crystal clear…
I feel 100% comfortable with our portfolio and current positioning.
Let's tell you exactly why.
What's happening right now
Mr. Market has entered into an exaggeration phase.
Everything linked to AI is skyrocketing.
The fundamentals just don't seem to matter anymore.
And here's the hard truth: Quality is the worst-performing factor of 2026 so far.
[Image — factor performance 2026 year to date]
Here's some extra proof shared by my friend Sebastian:
[Image — chart shared by Sebastian]
Should you be worried about this?
The answer is no.
We've been here before
History doesn't repeat itself. But it often rhymes.
Do you remember these headlines?
[Image — 1999 press headlines mocking value/quality investors]
They were written in 1999.
From 1998 to 2000, the Nasdaq surged 75%.
Over the same period:
Berkshire lost 18.9% (underperforming by 93.9%)
Fairfax even lost 64% (underperforming by 139%)
[Image — Berkshire and Fairfax vs Nasdaq, 1998-2000. Source: Fiscal.ai]
We are seeing something similar today.
Just like then, the warning signs are growing:
The riskiest stocks are hitting all-time highs relative to the S&P 500
The safest stocks are hitting all-time lows relative to the S&P 500
Nobody seems to care about quality right now.
That's usually when it matters most.
What I focus on instead
Rather than watching daily price movements, I focus on just one thing…
How much money are our companies making for us?
Right now, Our Portfolio generates:
$65,520 per year
$5,460 per month
$1,260 per week
$179.5 per day
$7.5 per hour
$0.12 per minute
That number keeps compounding.
Regardless of what Mr. Market does on any given day.
Here's what the evolution looks like:
[Image — portfolio look-through free cash flow over time]
I expect the Free Cash Flow of Our Portfolio to keep growing year after year.
Do you know why its important?
In the short term, the market is a voting machine. But in the long term, it's a weighing machine.
Eventually, stock prices always follow the evolution of the intrinsic value.
So if our companies keep generating more and more cash, the stock price will follow.
History doesn't repeat itself, but it often rhymes.
Just look at what happened after the Dot-com bubble.
Both Berkshire Hathaway and Fairfax Financials outperformed the index by a wide margin:
[Image — Berkshire and Fairfax vs the index after the dot-com bubble. Source: Fiscal.ai]
So coming back to the question… Am I worried?
No.
We are confident in our analysis.
The fundamentals of Our Portfolio are very strong.
The thing I'm a little bit concerned about?
You. An invaluable Partner.
Investing can be brutal. You are doing it with your hard earned money.
You need to be mentally prepared for both the upside and downside.
Think of the markets this way:
One year out of three, the stock market will go down at least 10%
One stock out of three that we buy will be a disappointment
One year out of three, we will underperform the index
Should you switch right now?
So should you consider switching your investing strategy right now?
It could be tempting.
ETFs are crushing it
Momentum stocks are soaring
Almost everything exciting is working
But if you switch from Quality to Momentum or ETF investing right now?
You'll probably do it at exactly the wrong time.
This could be very harmful for your long-term wealth.
Napoleon once said that a genius is the person who can do the average while everyone around him is losing his head.
We're at such a moment today.
Conclusion
Here's what you should remember from today:
Yes, quality is not doing well right now
Yes, I feel personally responsible for that
Yes, these are genuinely tough times
But our companies keep generating more and more cash for us every single day.
Their competitive advantages are intact
Their balance sheets are healthy
Their earnings keep growing.
Mr. Market will eventually recognize that and reward us for that.
He always does.
Stick the course, Partners.
This will be an amazing journey. ❤️
Everything In Life Compounds Pieter
Book
Order your copy of The Art of Quality Investing here
Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data
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