Learn the method

Most people build a portfolio bottom-up: they buy companies they like until they run out of money. The result is usually lopsided, and they only find out how lopsided during a crash.

This method works top-down. First you decide how much of your money belongs in each of five buckets. Only then do you decide what goes inside each one.

The bucket weights do most of the work. Two people holding entirely different stocks with the same bucket weights will usually have more similar results than two people holding the same stocks with different weights.

Our model portfolios run from risk 6 to risk 9 on a 10-point scale. Higher risk means more growth and speculation, less ETF core and cash. It also means deeper, longer drawdowns.

The honest way to pick a level isn't to ask how much return you want. It's to ask how much loss you can watch without selling. Selling at the bottom is how most investors turn a temporary drop into a permanent one.

What the past looked like

Broad US stocks fell more than half from peak to trough in 2007–2009. The Nasdaq lost roughly three quarters of its value after the 2000 peak and took about fifteen years to recover. In 2022, large tech stocks fell around a third and many high-growth software names fell 60–80%. Growth-heavy portfolios live closer to the second and third examples than the first.

Time horizon changes the answer

Horizon is when you'll need the money, not your age. Money for a house in three years shouldn't sit in a risk 9 portfolio, even if you're 25. Short-horizon models cap speculation at 5% and raise cash. Long-horizon models lean into growth because there's time to recover from drawdowns.

A high dividend yield is often a warning sign, not a gift: the price has fallen because the market doubts the payout. The dividend growth bucket looks for the opposite, companies with modest yields that keep raising them because the business underneath keeps growing.

A company has to pass all five tests to qualify:

Companies that miss exactly one test are tagged DGI (dividend growth investing) and still useful in lower-risk portfolios. High-yield, low-growth payers are tagged Income. Every DD report runs this check explicitly, so you can see which test a company passes or fails.

The growth bucket is split into three tiers by year-over-year revenue growth:

• HyperGrowth, above 30%: often just turning profitable and priced at a premium. Smaller positions.
• Growth, 20–30%: scaling category leaders with defensible positions.
• Mature Growth, 10–20%: highly profitable mega-caps. These hold the largest single positions.

Companies move between tiers as they grow. A chipmaker growing 100% on a small base is HyperGrowth; the same company at ten times the revenue growing 15% is Mature Growth, and its position size and expectations should change with it.

The sizing rule is counterintuitive: the fastest growers get the smallest positions. Their outcomes are the widest, so each one can hurt you more if the thesis breaks.

Speculative positions are bets on a single thesis: a launch vehicle reaching orbit, a quantum computer becoming useful, a crypto asset becoming a reserve. Many will fail. The point is that the winners can be large enough to matter while the losers can't sink you.

Every speculative position in our reports carries a tag like (8/2). The first number is conviction in the thesis, out of 10. The second is the maximum position size as a percent of the whole portfolio. A high-conviction idea still gets a hard cap.

Our DD reports follow the same structure every time, so you can compare companies side by side. Read them in this order the first time:

1. Core idea and bucket. What the company is trying to become, and which bucket it belongs in.
2. Bull and bear cases. What has to go right, and what breaks the thesis. If you can't restate the bear case in your own words, you don't understand the risk yet.
3. Finances. Is revenue growth speeding up or slowing down? Are margins improving?
4. Competition and customers. Who could take the business away? How concentrated are the customers?
5. Verdict and entry zone. The price range where the report thinks the risk and reward are reasonable.

Reports are written by an AI research process from public sources and dated. Treat every number as something to verify, especially before acting on it.

Dollar-cost averaging

Investing a fixed amount on a schedule, weekly or monthly, removes the temptation to time the market and means you buy more shares when prices are low.

Two-tranche entries

For a single stock, split the position in two. Buy about half in the report's first entry zone and keep the rest for a pullback. If the pullback never comes, you still own half; if it does, you average in lower.

Rebalancing

Markets will push your buckets away from their targets. Check quarterly, and rebalance when a bucket drifts more than a few points from its target, by directing new money to the underweight bucket before selling anything.

Which account

In the US, dividend payers are often held in tax-advantaged accounts (IRA, Roth) to shelter the income, and speculative positions in taxable accounts where losses can offset gains. Tax rules depend on your situation; check with a tax professional.

The goal of the model portfolios is to make themselves unnecessary. Once you've read a few, try this:

1. Pick your risk level and horizon using lesson 2.
2. Write down your bucket targets. Start from the matching model portfolio and adjust only where you have a reason.
3. Fill the ETF core first. Two or three broad funds are enough.
4. For each company you want to own, decide its bucket using lessons 3–5 before you decide its size.
5. Size positions inside each bucket. Check that no single company is more than a reasonable slice of the whole.
6. Add up every bucket. They should total 100%.
7. Write one sentence for each holding: why you own it, and what would make you sell.

That last step is the one people skip, and it's the one that keeps you from panic-selling a good company or holding a broken one out of hope.