2 quality ASX 200 shares I’d buy if the market fell another 10%

Markets don’t fall in a straight line. They lurch, recover, lurch again — and right now, with geopolitical tensions between Iran and the United States keeping energy prices volatile and inflation expectations unsettled, the S&P/ASX 200 Index (ASX: XJO) is doing exactly that.

For long-term investors, this kind of volatility isn’t a threat. It’s a calendar.

A 10% pullback from current ASX 200 levels wouldn’t be unusual by historical standards. 

What matters more is what you’d do with it. Rather than reaching for a broad ETF, I’d be looking at two specific companies that I think deserve a spot in a quality portfolio — and that would become even more compelling at lower prices.

The case for Soul Patts

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is one of Australia’s oldest listed investment companies, but it operates more like a quietly compounding private holding company than a traditional fund manager.

Soul Patts gives investors exposure to a carefully managed mix of assets: resources, telecommunications, nationwide swimming schools, agriculture, water entitlements, electrification, and more. It recently completed its full merger with Brickworks and has been actively reshaping its portfolio — most notably, selling down its long-held stake in TPG Telecom Ltd (ASX: TPG) to free up capital for higher-growth opportunities.

That capital reallocation is the interesting part. Soul Patts isn’t sitting still. The proceeds from the TPG selldown give management fresh firepower to deploy into assets it believes will deliver stronger long-term growth. For a patient investor, that’s exactly what you want to see — disciplined capital allocation, not loyalty to underperforming positions.

At time of writing, the Soul Patts share price is currently around $42.30. A 10% market-wide pullback might push the share price even lower, but the underlying value and fundamentals of the Sol Patts’ underlying businesses wouldn’t change materially. That’s the gap a long-term buyer could exploit.

Why Pinnacle is worth watching

Pinnacle Investment Management Group Ltd (ASX: PNI) is a different kind of business but a similarly compelling structural story.

Pinnacle runs a network of affiliated fund managers, providing them with seed capital, distribution support, and operational infrastructure. It earns revenue from management fees and a share of affiliate profits — a model that scales well as funds under management grow.

In its most recent half-year results, Pinnacle reported record net inflows of $17.2 billion, with strong contributions across retail, institutional, and international channels. That’s a business attracting capital, not losing it.

The Pinnacle share price has pulled back sharply from its 52-week high of $25.33 to around $12.30, and the stock carries an analyst price target of around $24. That’s a meaningful gap between where the share price is and where analysts believe it could be.

A broader market sell-off would likely push Pinnacle lower in the near term. But for an investor with a long time horizon, that volatility is a feature, not a flaw.

The Foolish takeaway

Neither of these companies needs a market crash to be worth owning. Both are genuinely interesting at today’s prices. But the point of having a watchlist is knowing exactly what you’d do when prices move — and a further 10% dip in the ASX 200 could see individual stocks like Soul Patts and Pinnacle fall further still, putting them within reach of entry prices that are difficult to walk away from.

As always, share prices can fall further than expected, and volatility driven by macro events — energy prices, rate expectations, geopolitical uncertainty — can linger longer than most anticipate. However, quality doesn’t go on sale forever. 

When it does, it pays to be ready.

The post 2 quality ASX 200 shares I’d buy if the market fell another 10% appeared first on The Motley Fool Australia.

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Motley Fool contributor Leigh Gant has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Pinnacle Investment Management Group and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.