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Avoiding speculation in active investing
Don’t try to pick the winners
Aim to avoid the losers

Avoiding losers in your portfolio

picking winners is a losing game.

We believe that many investors have an imperfect understanding
of where alpha comes from.

Most think in terms of picking winners

when we believe their goal should be to avoid losers.

what is a loser?

A loser is a company that cannot deliver the revenue growth indicated by its stock price.

Important Disclosure

The snapshot is being provided for illustrative purposes only and should not be construed as providing investment advice or as a recommendation to buy or sell any particular security. This snapshot is taken at a particular point in time and any analysis or information contained in it is outdated and should not be relied upon. Past performance is not an indication or a guarantee of future results. For full disclosure click here.

Reset Drag to see the extra return you might have made by avoiding the losers in the S&P 500.

the h-factor

know the number

Use the h-factor
aim to avoid the losers

The h-factor is the probability that a company may fail to deliver the revenue growth indicated by its stock price.

Manage Risk Like an Actuary

a five-step process

1 Calculate a company's revenue growth indicated by the stock price.
2 Understand the revenue growth possibilities the company could deliver.
3 Compare what the company must deliver to what the company could deliver.
4 Calculate the h-factor.
5 Rebalance the portfolios.

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