What Is the 200-Week Moving Average (And Why It Matters)

The 200-week moving average is one of the most reliable technical indicators for long-term investors. It’s simple, time-tested, and has been endorsed by some of the greatest investors in history — including Charlie Munger.

What Exactly Is the 200-Week Moving Average?

The 200-week moving average (200w MA) is the average closing price of a stock over the past 200 weeks — roughly 4 years of trading data. It’s calculated by:

1. Taking the closing price for each of the last 200 weeks
2. Adding them together
3. Dividing by 200

This creates a smooth line that filters out short-term noise and reveals the long-term trend of a stock.

Why 200 Weeks?

The 200-week period isn’t arbitrary. It represents:

• 4 years of market data — enough time to smooth out short-term volatility
• A full business cycle — capturing both good times and bad
• Institutional memory — the timeframe large investors use for strategic decisions

The Power of the 200-Week MA

1. It Acts as a Magnet

Quality stocks tend to “bounce” off their 200-week moving average during corrections. This happens because:

• Long-term investors see value at this level
• Institutional buying often kicks in
• The psychological importance creates a self-fulfilling prophecy

2. It Filters Out Noise

Unlike daily or weekly indicators, the 200-week MA ignores:

• Earnings misses
• Short-term panic
• Market manipulation
• News cycle drama

3. It’s Historically Profitable

Studies show that buying quality stocks at or near their 200-week MA has consistently outperformed buy-and-hold strategies over long periods.

Charlie Munger’s Endorsement

Charlie Munger, Warren Buffett’s long-time partner, famously said:

“If all you ever did was buy high-quality stocks on the 200-week moving average, you would beat the S&P 500 by a large margin over time.”

This isn’t just theory — it’s a strategy that has worked for decades.

How to Use the 200-Week MA

For Entry Points

When a quality stock approaches or touches its 200-week MA, it often represents:

• A buying opportunity
• Maximum pessimism
• Value emerging from fear

For Risk Management

The 200-week MA also serves as:

• A line in the sand for long-term trends
• A filter for avoiding value traps
• A patience enforcer (wait for the right price)

Quality Matters

Not every stock that hits its 200-week MA is a buy. The strategy works best with:

• Market leaders
• Companies with strong fundamentals
• Businesses with competitive moats
• Stocks with long-term growth potential

The Challenge: Timing and Monitoring

The biggest challenge with the 200-week MA strategy isn’t understanding it — it’s executing it:

1. Monitoring hundreds of stocks is time-consuming
2. Signals are rare — you might wait months
3. Acting quickly matters — opportunities can be brief

That’s exactly why we built our automated scanning system. We monitor nearly 1000 quality stocks every few minutes and alert you instantly when they approach this critical level.

Start Using the 200-Week MA Strategy

The 200-week moving average isn’t magic — it’s math. But when combined with quality stock selection and disciplined execution, it becomes one of the most powerful tools in long-term investing.

Ready to put this strategy to work? Get free alerts when quality stocks hit their 200-week moving average.

← Back to Blog