Figures as of
Return Curve
The Book · Allocation by Weight
Weights as a share of net asset value. Totals may exceed 100% when margin is in use.
Positions
| Ticker | Strategy | Weight | Position return |
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Operations
The engine. We own liquid retail-momentum names and sell calls against them, laddering expiries and buying the contracts back cheap. Premium is the carry. The shares are collateral — they earn while they wait.
Limit · 20% of NAV per name · tested weekly
Short-dated, defined-risk positions on crypto ranges, FX fixings, index and commodity closes, across ForecastX and Kalshi. Wound down in August. It had carried most of the account's turnover and almost none of its P&L. Reopened deliberately on Aug 24 to gather clean data for a systematic forecast strategy now under construction. Sized small and run for the record it produces, not for the return.
Status · open · sanctioned for data · not scored
We take risk directly, and we take it rarely. These are investments, not trades. We hold them outright — no calls written against them. Thesis comes before size. We express conviction in the position and never talk it up after the fill.
Control · thesis before size · held, not collateralized
Control framework: a 20% per-name limit, a 10% cash floor, stops marked before entry, and drawdowns cut rather than nursed. The limits are binding, not advisory — a breach goes into the weekly after-action whether or not the week made money.
Weekly After-Action
Prior after-actions — select a week to read the full report
Dashed cards were rebuilt from the trade record after the fact; solid cards were graded live that week.
Every week since inception
One cell per Monday-to-Friday week, oldest first. Colour is the week's time-weighted return; the outline marks a week that breached a limit. Select a cell to open its after-action.
Service Record · Cumulative
Between the After-Actions
Accolades
Failures
Discipline · the tally
Best closes
| Ticker | Date | Type | Share of NAV |
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Worst closes
| Ticker | Date | Type | Share of NAV |
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By name · shares of the whole record
| Name | Closes | Win | Profit factor | Share of gains | Share of losses |
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Event sleeve · by contract
| Contract | Closes | Win | Profit factor | Share of gains | Share of losses |
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How to read this
Written thirteen days after FTX filed for bankruptcy, working through the wreckage while it was still moving. Runs the full taxonomy — emerging, international, overdiversification and concentration, management, market, liquidity and credit — and does not stop at the abstract: the concentration section names the position sizing in the author's own account at the time.
Reproduced verbatim · figures and positions as of Nov 2022
Investments are the life blood of any corporate entity or individual pursuing wealth acquisition over a set time frame. There are a variety of investments the most common of which are traditionally stocks, real estate, bonds, certificate deposits and treasury bills (Finra). There are also alternatives for the more risk tolerant investor such as crypto, trading cards, shoes and anything in between that one expects to store value and potentially increase in monetary value. Naturally with any investment there is risk associated with any returns, these portfolio risks include emerging risk, governance risk, overdiversification risk, concentration risk, market risk, interest rate risk, liquidity risk, credit risk, international risk and of course price risk, while every investor may be affected by risk differently the tools in managing risk are quite similar based on the type of risk (Successfully Treating Risk units 8 and 9).
In mitigating risk within a portfolio, investors must be forward thinking in order to predict, quantify or qualify holdings, in doing so investors will avoid financial headache of losing their shirts. Emerging risk as defined by Swiss Re are the risks which 'are newly developing or changing risks that are difficult to qualify" (Swiss Re). One of the most recent emerging risks which came to pass in February was the "Russian Special Military Operation" which led to many American companies ceasing operation in Russia as a result and to penalize the Russian economy. An eager eyed investor would have seen the opportunity that arose due to this black swan event in Ukraine but would soon be restricted after June 6th 2022 due to an executive order from President Biden (U.S Department of Treasury). In doing so Americans can no longer purchase Russian securities which would have been an emerging risk at the beginning of the year but somewhat foreseeable following the invasion. To properly manage emerging risk investors, governments and business entities must adapt to the new world depending on any or all currently known variables. For example, when managing a family member's retirement portfolio, one theoretically takes a varying risk averse approach dependent on the age of the account holder. In this hypothetical a 20-year-old son is managing one of his father's accounts which has a quarter million in total value distributed among cash, securities and bonds which are soon to mature. The boy has been investing for a while and assumes that it is in his best interest to grow and manage the account's value as he believes it is his inheritance. The emerging risk for the boy is whether or not he sees a penny of what he assumes is his inheritance but for father the risk is the boy's management of his capital, what happens when the boy realizes it is or is not his inheritance and overall long-term performance. Pertaining to risk overall in investing emerging risk may potentially be foreseeable but is just the tip of the iceberg of investment risk.
With investing internationally investors need to be aware of international risk. International risk is made up of other risks which include political, economic or transfer risks pertaining to operating in a foreign nation like Iran, Ukraine, Brazil, Russia or any other foreign nation an investor or business entity is looking to invest in to expand their wealth or grow their operations (Santander). The most common of the international risk is political risk pertaining to the political environment of foreign nation and foreign exchange risk relating to the fluctuations in a currency's value, for example a major political risk could be the nationalization of a major industry or the similar to Exxon expanding its operations in Guyana where a variety of risks are at play ranging from terrorism, pirates and various other political risks (Huchzermeyer). As mentioned earlier leaving a nation to minimize political risk and to some extent product relations with existing domestic customers leaving a nation is optimal akin to pulling out of Russia like McDonalds, Visa and several companies which left outright or phased out of the nation following its invasion of Ukraine. Additionally, if there is a political and economic vacuum a cartel could arise and capture influence of a portion of a nation like what the Sinaloa Cartel has done and continues to grow outward from Mexico into Latin America and other regions, surely there is opportunity for a more risk inclined investor but the character of an investor or a business entity's ethics will be brought into question for why they participate in investing in countries which have a less savory sense of ethics, lack of control and for providing liquidity to what some call thugs, criminals and terrorists (Felbab-Brown). Lastly returning to foreign exchange risk there is also a component which is transfer risk, foreign exchange risk as I mentioned earlier relates to the fluctuation in a currency's value where transfer risk picks up the slack and is the potential for loss in changing one currency for another essentially acting as a premium depending on the value of the currency favored for a transaction (Successfully Treating Risk unit 8, Santander). Naturally investors must be aware of cash flows to be able to overview how capital is utilized and see the gains and losses due to foreign exchange fluctuations usually shown within a company's financial statements.
Within a personal investment portfolio or portfolio of operations the risk of overdiversification and concentration are important to be aware of for all investment ventures. In this investors and business entities must be fully aware of portfolio makeup and restricting expansion of positions and operations in a nation, target market, asset or equity. The most recent financial disaster which was a warning about concentrating positions in various portfolios was the financial crisis and most recently the crypto-commodity broker FTX which has filed for bankruptcy during the second week of November 2022. In the case of the Financial Crisis several major banks and financial institutions such as Goldman Sachs, AIG, Lehman, Bank of America and along with several other firms were concentrated in collateralized loans, ninja loans and other debt instruments which were being overleveraged to increase profitability (Gethard). While it is important to recognize leverage and improper due diligence along with over lending to unworthy borrowers contributed to the crisis, selling and packaging the mortgages as new products and essentially playing roulette with mortgage-backed securities and betting on red while ball lands on black and the House always wins. On the individual level I am concentrated in one of my brokerage accounts with one of my positions where a software firm I believe has long term value which is not realized by the market is the core of the account making up roughly 38-44% of my portfolio depending on the day and market consensus however in addressing the volatility and concentration I am diversified to some regard where I have the rest of the portfolio with various stalwart and conservative firms such as Exxon, McDonalds, JPMorgan, and a two other financial institutions and a marginal and growing position in a defense firm as a speculative investment. While my approach may be inappropriate for an older individual, I believe this was the best approach for short term wealth acquisition for the near future whereas with my retirement account which is a Roth IRA. In my IRA I am perfectly diversified just by holding the Vanguard Total World Stock Index Fund which is globally diversified while holding a tiny position in other individual stocks which are not at the core focus or philosophy with that account which is long term wealth accumulation. A side effect of this is my investment management style which every investor and investment manager has and with that pertaining to investing introduces management risk.
In investing as a firm, board or individual decisions must be made, justified and argued then financed or acted on. This could be anything ranging from increasing pay within the firm presumably increasing overhead, cutting a losing position which has underperformed for the last few quarters or cancelling a project due to unknown cost constraints previously unknown when the project was initially approved or cut due to a decision made by the board or management. In investing in any firm, a piece of due diligence which investors must be aware of or at least familiar with is the makeup and potentially character of management in order to address management risk and be confident in their competency to perform their duties, tackle issues and have a firm operating and growing properly while also maximizing shareholder value (Tong). While the crypto market may be a bloodbath with the loss of a firm valued at $32 billion and the $1billion in customer funds which were held with FTX is the best example in recent years of negligent management in addressing operational risks and the decisions made by the former Chief Executive Officer Sam Bankman-Fried leading to the firm's collapse and bankruptcy while more information on the firm's exploits flood the press since last week. To lose $1billion of customers funds is inexcusable especially for a firm which was one of if not the largest crypto firms in the world prior to its collapse. With the information available at the time of November 17th FTX was overleveraged, participating in highly volatile crypto derivatives and not holding enough stable-coins which are pegged to the dollar or simply did not have enough cash on hand to mitigate the risks they were taking and it blew up in their faces. The nuclear explosion that was FTX's bankruptcy is still being looked into by journalists, crypto hobbyists and yes-men, bankers, lawyers, Wall Street along with anyone with an interest in finance (David Yaffe-Bellany). It is a shame that one firm, person or group's management, decision making and actions can turn a firm or portfolio into a golden goose or become a nuclear explosion wiping out everyone and thing that was involved with it just like FTX and Enron did, perhaps the crypto market should have expected this outcome due to their immense risk tolerance and high-risk appetites.
In portfolio management market risk is prevalent in the daily fluctuations and the volatility of a stock's price fluctuating with how market factors such as interest rates, the overall market and commodity prices (Risk.net). With market risk there are a variety of factors that could cause fluctuations or price volatility akin to how interest rates can improve or destroy returns depending on how low or high the Federal Reserve sets interest rates at a given time in order to stimulate or constrict the American economy. In the case for returns overall with higher interest rates, returns will be reduced if not eliminated depending on how high interest rates are for an investor or firm reducing their return on investment or return on debt eliminating any benefits of leverage and reducing the amount of leverage therefore reducing how much capital can be utilized during a recession or depression. Contrarily with lower interest rates firms and investors will borrow and be more leveraged as the cost of debt can be justified with the additional return to a firm's or investor's portfolio increasing their return on investment and return on debt justifying the cost of the leverage. While leverage is important it is a decision by management to utilize the acknowledgement of cost of debt and the cost of debt and return relationship is important to identify with varying interest rates to simulate different economic scenarios within a portfolio to project returns of a portfolio or project and plan and act on. While interest is important to address and act around when the state of the economy is varying firms like the ones in the oil industry and its investors must know the factors which fluctuate and go into gas production such as steel and the chemicals which go into the oil products during the treatment process and production of oil derivatives. In the case of oil, a variety of factors go into the pricing at the pump ranging from commodity traders betting on the price of a barrel of oil, price of steel, war and whether or not if a nation increases or constricts its production of oil in recent years it usually is Saudi Arabia. In my own personal scenario within my portfolio each individual position has a variety of factors I am aware and unaware of however with a more volatile investment I watch every little factor and opportunity like a hawk because I am hedging the rest of the portfolio against it. As a result, if that firm falls an additional 20%, I will sell off a good chunk of that position but my intrigue has the better of me and I feel like I need to know how this firm will position itself for the future and would love to see the long-term implications of an Enterprise data solutions firm whose products are industry agnostic. Simply put supply and demand are the primary motivators of a stock's price action however the demand for their goods is a baseline the demand of a firm's stock could also be overbought or oversold but does not necessarily equate to the firm being over or undervalued. The overall market pushes the consensus in the equity markets that translates to a stocks nominal 'price' and whether Elon Musk tweeted something relevant to Tesla or Twitter. Being informed on every factor involved with an investment is necessity in order to not be blindsided by the price action of equities or to reinvest, reduce, exit or cancel a project as the internal rate of return, net present value or any other factor the project is dependent on becomes far too expensive to upkeep.
In managing leverage there are liquidity and credit risk, liquidity being the measure of how quickly assets can be turned to cash in a worst-case scenario while credit worthiness measures and can verify whether a firm is able to pay its debts based on the cashflows from operations and other assets and collateral that can be used to construct a loan and repayment agreement. A healthy number of firms and investors are leveraged but the real trick is to utilize it properly, there best examples to realize the failure of improper leverage utilization are best the Financial Crisis, the FTX implosion and within the portfolios of anonymous investors on investment forums across the web. In the case of the financial crisis as mentioned earlier a variety of financial institutions were improperly leveraged and operating improperly by loaning to unqualified individuals, securitizing mortgages and selling the securities back to the market until it was discovered it was all a fugazi and rocked the financial world in 2008-2009. The best misappropriation of funds and leverage recently was the FTX fiasco which is still unfolding but an important lesson on mismanagement of leverage, derivative and destroying involved and tied to the firm, the caveat with the Financial crisis was that the Federal government created the TARPS program which gave banks cash for preferred stock in order to secure the stability of the financial sector whilst also upholding safety and soundness of the banking system while some firms were acquired, dissolved or allowed to collapse like the Lehman Brothers. Additionally, the most interesting part of the financial crisis was that the banks which were overleveraged were loaning out what they could under the reserve requirements as their primary profit centers come from lending and since 2008 the reserve has grown and shrunk under different political administrations. Within personal finances varying on the individual credit risk exposure is most likely a credit card or mortgage which is subsidized by ones income stream(s) in order to not default and face the financial repercussions, whereas similarly when using margin in an investment portfolio one borrows against his own equities, securities and 'cash' held within the account and the repercussions for that would god forbid get margin called where a improper amount of due diligence or sheer lack of reasonable risk management skills occurred and will obliterate a portfolio assuming a portion of it is still around due to the ability a brokerage may sell securities which are held by any investor. The only way to mitigate liquidity is to hold assets and cash on hand while credit or leverage must be utilized within what a firm or investor can tolerate without it being a burden. Utilizing margin is like playing with fire and the financial horror stories and firms that have collapsed due to improper utilization of debt serve as a warning to me and many other younger and less experienced investors.
Like history there are a variety of instances where risks had to be taken or mitigated, occasionally they are unavoidable or side effects of risk mitigation strategies like the accidental burning of the Library of Alexandria during the Civil War between Julius Caesar and Pompey (Mid-Continent Public Library). The actual ability to manage risk and properly mitigate it or exploit it shows preparation, adaptability and fortitude of an investor or the management within a firm to not jump ship when a situation turns for the worst but steering through the storm of improper risk management with investments and projects. Whether an Investor is a degenerate gambler or a sophisticated investor, it is paramount to be aware of any or all risks associated with an investment.
Research I run for myself, not advice. I am not a licensed financial advisor. Reproduced word for word as submitted in November 2022, so its figures, forecasts and positions reflect that date rather than a current view. Act on it and the risk is yours, not mine.
The first place the operating rule appears in writing: one concentrated high-risk position, the rest of the book deliberately hedging against it. Written ten days after Concept 01, while still job hunting and saying so plainly. Runs from Amazon fulfillment floors to eBay shipping economics to the decision to move a YouTube channel off the author's own name — risk treatment as a practice rather than a subject.
Reproduced verbatim · written Dec 2022
In life there are a variety of risks. Risk can be as simple as trying something new or going with what someone already enjoys or loves like a Diet Coke or trying something a new limited time flavor Coke or alternative Cola. While these examples are marginal to risk overall application of risk management and treating or reducing it depends on each individual.
In the application of risk management individuals must decide the course of action given a risk or set of risks (or variables) and plan a course of action. So, what is risk? Risk according to Merriam Webster is the "possibility of loss…" meaning that going to a casino means you most likely risk whatever money you have while you're at the blackjack table. Risk is a good and bad thing but also depends on the person who is asked and how a situation is going based on variable circumstance. In my case I like risk when the risk and reward are justified for instance if I could have a 50 percent chance that I can bet 10 dollars and get 15 back and get a 5-dollar profit while there's also a 50 percent chance that I lose 5 dollars and only get back 5 I would not take the gamble. Whereas if the probability for a 5-dollar profit was 60-80 percent and loss probability was 20-40% I would be more inclined to take the risk. In taking risk there should be some level of justification in order to warrant an action in a scenario, in my life the risks I am taking to secure a job in my field of interest are going to college, job hunting and networking which I am currently failing at in securing a job. In other cases, as a workaholic there are cases where far too many things are ongoing and this or that will fall through the cracks and the real risk treatment is how you go forward with unforeseen events and failures.
I personally successfully and unsuccessfully actively and passively manage and treat risk in investment portfolios I manage for my parents and myself, when I worked at an Amazon Fulfillment Center during the summer of 2021 and while I was an active seller on eBay between early 2020 through the middle of 2022. Managing risk in an investment portfolio is very individualistic and relies on the type of account and the individual's risk tolerance and risk appetite. Naturally a 22-year-old man has a higher risk tolerance and risk appetite than a 61-year-old man and creating a portfolio to address each investors needs and goals is the magic of making a long-term portfolio. In managing risk in portfolios, it is best to diversify positions and have the total value of a portfolio distributed among cash, securities and bonds at varying times to maturity. I hedge my positions with my risk tolerance and acceptance due to a concentration in a certain position in my personal portfolio. In the case of my investment portfolio, I have a high-risk tolerance with a concentration in one high risk position while the rest of the portfolio is hedging against that position in lower risk equities and unrelated industries. In managing an elder's portfolio and my retirement portfolio the risk tolerance is a polar opposite since the goal is risk mitigation while chasing wealth accumulation.
While I worked at Amazon risk treatment varied case by case as there were many factors which were uncontrollable like being understaffed, heat, when a fulfillment center associate received training and when a specific pallet had to move. In some cases, process assistants and managers would have to obtain fulfillment center associates from another lane or remove an employee from their position to aide with a variable process during a shift, the most popular processes which needed more employees on hand were the position of water spider and to aide in transportation and the loading of pallets onto freight trucks. Additionally, successfully treating and managing risk on an e-commerce front is far too variable due to the multiple risks and strategies needed to act upon to in order to maintain a good standing on e-bay and effectively with customers while also ensuring that goods are shipped and delivered in a timely fashion along managing cash to cover business and operation expenses. The most interesting part of risk management while running a e-Bay store front is all the little variables that are unknown before you start operating a storefront where risk treatment will vary based on the item sold. For example, when selling various trading cards from games like Pokémon and Magic the Gathering the cost to ship a card would vary based on the price the card sold at in my case if a card sold for less than 4 dollars, I would mail out the card since my expense to mail out the product was 70 cents, while if the card was worth more than 4 dollars, I would get a bubble envelope and mail a card out with tracking in order to know where a product is throughout the shipping process. There were other items which were interesting to ship such as an Xbox one and all its peripherals, a handful of video games, textbooks and other items and trinkets I no longer needed or saw as junk that I could probably sell to get some spending cash. The largest risk factor that occurred and influenced me in minimizing my usage of e-bay and removing all the items I had listed was e-bays expenses which used to be a smaller rate back in 2020 and grew for low-cost items which forced me into losing money or breaking even prior to the expense hike and oddly enough before the relationship with PayPal was severed when that relationship was very convenient for me as a seller. Lastly with risk management of a YouTube channel which initially was tied to my name I was contemplating my career risk when I wanted to start a podcast so I moved all of my book club videos and deleted or moved a variety of other content and videos relating to my portfolio over to the podcast's channel. I believed that was the appropriate risk mitigation strategy due to my variety of interests which I rather have a potential employer not see directly attached to my name. I believe there is nuance when creating opinions on art and literature and a one size fits all approach will never work so I use the channel as a creative outlet of ideas and to gather my thoughts weekly or whenever I am able to record a podcast episode, discuss my most recently read book and see where I can go without being too vulgar or edgy while trying to maintain a high level of authenticity. In these various cases of risk treatment and application of risk management I tend to take a variable or better put adaptive approach with the situation presented to me and allow my intuition, problem solving and management skills allowing me come up with a solutions and moving forward with the approach that is most practical, strategic or objective when it comes to a complex scenario or a situation that must be given more thought than the approach to life I have of doing all that I can, failing when I do and never failing at something again, a break it and fix it approach if you will while never giving up and getting better at anything I set my mind to.
From the course I personally enjoyed learning about the variety of risks that exist the most intriguing one to me at the moment is credit risk and part of the reason I am taking Credit Analysis next semester. I will definitely be using a varied approach to a myriad of events that occur in my life as a result of taking the course and integrating it into my own risk tolerance or what I would consider my own personal risk profile which is made up of experiences, successes, failures, ones' finances and a variety of other variables that make up someone's risk appetite, tolerance and how and why someone has a certain approach to life and risk overall. I usually tend to take a hedging strategy now and in the near future and take an all or nothing approach as it seems the most appropriate for my risk tolerance and what I want to achieve career, investment and business goals and ultimately get what I want to feel satisfied with life through actively problem solving and managing risk.
Research I run for myself, not advice. I am not a licensed financial advisor. Reproduced word for word as submitted in December 2022, so its figures, forecasts and positions reflect that date rather than a current view. Act on it and the risk is yours, not mine.
Takes the "Starbucks is secretly a bank" claim seriously enough to actually test it against the 10-K, and then refuses it. $1.596bn sitting in gift card balances, lent to the company at 0% by its own customers, throwing off $164.5m of breakage revenue — a float business by any honest reading. The conclusion lands somewhere better than the premise: not a bank, a coffee shop that dabbles in fintech, and unregulated as such.
Reproduced verbatim · figures from FY2021 filings
Coffee a staple beverage fueling many Americans mornings, has grown in popularity since 1773 as a result of the Boston Tea Party dumping British Tea into the Boston harbor in retaliation of taxes in the interest of what would become the United States (Avey). The preparation of coffee varies on personal preference ranging anywhere from a simple cup of black coffee to a sugar filled treat which requires diligent preparation and ingredient-based instructions. The need for consistent and quality coffee on the go in America has solidified Starbucks as a staple firm which offers convenient and practical locations and products for their consumers, in sustaining their position Starbucks has become a bank in parity from it's mix of customer and brand loyalty, gift card program and investments that fuel expansion.
Every business requires customer loyalty in order to maintain its control over segments of operation, in regards to banking banks must offer a variety of services and financial products to target and acquire new customers while maintaining existing customers (Koch 24-26). Starbucks may call itself "the premier roaster, marketer and retailer of specialty coffee in the world," which operates in 84 markets but it also acts like a bank with their variety of products and services (Starbucks Corporation 5). Starbucks has maintained its customer and brand loyalty through marketing, its popularity and various locations ranging from universities, airports and anywhere in between a customer and their destination ensuring loyalty via the customer experience and the variety premium products offered (Tim Murphy). The experience of any Starbucks has the sense of modernity and convenience that allows anyone to work remotely, enjoy a cup of coffee or meet for romantic or the business needs of its clientele. In order to maintain and grow their clientele Starbucks merged two of its programs to create what the Starbucks Rewards program is today (Starbucks). In the progress of doing so Starbucks customized the customer experience by personalizing orders and offers by gamifying purchases in stores or within and through the app (Formation).
The necessity of customer loyalty is paramount for maintaining, growing and sustaining operations and cashflows which Starbucks has done an excellent job on the surface since 2009 with the fusion of its Starbucks Card Rewards and Gold loyalty programs (Starbucks). In 2021 alone there was a total of 1.596 billion in gift cards alone almost a 10% increase since 2020 and may be lower than usual following the business interruption of the Coronavirus outbreak (Starbucks 46). Interestingly, gift cards act as an obligation of a service or goods and balances do not decay but may expire at a given point in the future and presumably are reissued once expired repeating the process of a customer potentially forgetting to use their balance for a 100% profit if a balance is never used (Crockett). Additionally, roughly 25% of operating cashflows are reinvested in property, plant and equipment presumably fueling domestic and international expansion and it can be quickly shown how drastic of an impact coronavirus had on Starbucks' cashflows during 2020 where nearly 93% of operating cashflows were spent in the same category (Starbucks 47). Although Starbucks gift cards are not conventional deposits akin to how a bank would hold its clienteles' cash, one can see the parallels between the two when gift card balances are loaded onto a customer's app balance acting as a source of funds for either institution until used.
In operation the similarities between Starbucks and a bank continue with the utilization of capital for investment, growth and to fuel expansion. In essence with gift cards, Starbucks acts reminiscent of a thrift where balances are lent to Starbucks at a 0% interest rate by customers while Starbucks earns breakage revenue on balances totaling to 164.5 million effectively making 10% on every dollar held in gift card balances for the fiscal year of 2021 (Starbucks 53). Since Starbucks predominantly sells coffee instead of financial products and services like a bank calling Starbucks a bank is incorrect and the gift card segment is more comparable to companies like PayPal and Visa with their own prepaid gift card products (Visa 9). While Visa and PayPal's profit drivers are their payment systems, their gift card segments are an added benefit just as it is with Starbucks to their coffee business. The similarities with Starbucks and banks ends when one starts to look at it as a fintech firm that sells coffee, fintech firms are not under as much scrutiny and regulation as banks acting as a modern financial medium with access to a larger variety of investments and services which can the open doors to expedient growth unavailable to banks due to capital use restrictions.
In addressing the daily caffeine needs of many Americans Starbucks is in a stellar position. Starbucks creatively manipulated its former programs into their Rewards program every American knows of today. Although there are similarities with Starbucks and banks, Starbucks cannot be called a bank. If anything, it should be considered a coffee shop that dabbles in fintech services to bolster its bottom line.
Research I run for myself, not advice. I am not a licensed financial advisor. Reproduced word for word as submitted in December 2022, so its figures, forecasts and positions reflect that date rather than a current view. Act on it and the risk is yours, not mine.
Written in April 2023 — five months after ChatGPT, before the capital cycle that followed, and before most of the industry had priced any of it in. Argues predictive modeling, machine learning and artificial intelligence as the working instruments of both sides of an insurer: the underwriting desk and the investment arm that funds the claims. Closes on Oppenheimer.
Reproduced verbatim · forecasts as cited in Apr 2023
In our daily lives people will assess risks that they face and act accordingly by accepting, mitigating or eliminating a given risk based on their life experiences and financial circumstances. However, when it comes to insurance vast amounts of data must be analyzed in order to price a soon-to-be insured party's risks. In achieving proper risk management, underwriters and investment analysts must use data analytics tools such as predictive modeling, artificial intelligence, machine learning and other data analytic processes to analyze, develop and refine data.
In order to properly assess risk, underwriters must review data and predictive models in order to properly apply data, cull irrelevant data, acquire new data, integrate and utilize in order to have the most reliable model available for risk management. In doing so underwriters will "focus on key aspects for risk selection", for example following various projections it can be discovered that a potential client may be exposed to the possibility of a nuclear power plant failure in severity similar to the Fukushima due to the plants' location. Upon discovering this information an underwriter would either continue on with the client and provide limited coverage due to the potential severity of the claim or reject the client and defer them to another broker or a pool which specializes in nuclear energy insurance such as NEIL, EMANI, ELINI and the UK national pool known as the Nuclear Risk Insurers Limited. The application of Data Analytics will be variate in nature due to the variable types of risks involved in various business entities across the world in order to obtain enterprise insight into operational intricacies which will exist. To discover risks, the utilization of predictive modeling is used to project and forecast the a risk, machine learning in order to have an algorithm or artificial intelligence learn through application and analysis of a model.
For an insurer to maintain profitability alongside underwriting, insurer's must invest capital from earned and excess premiums. The earned and excess premiums are invested as a means to have enough capital in reserves to payout claims once an accident has occurred to a client and to fulfill their promise to pay. While insurers are restricted in how and what they can invest in insurers will have their own investment managers, hedge funds, private equity or even asset management arms similar to some banks like as Morgan Stanley's hedge fund Front Point Partners in the financial drama the Big Short. In order to maximize returns and attain investment income to guarantee that claims will be paid, investment managers must use Data Analytics processes just like underwriters but will focus on data for investment analysis and risk management while staying compliant to internal risk management requirements and compliant to federal requirements mandated by each state. The NAIC has a recommended "Investment of Insurers Model Act" (MDL-280) which outlines recommended regulations along approved and prohibited investments. Each state will have their own nuanced laws for example, the state of Texas' insurance code requires "all investments made by the insurer under this section (434.052) does not exceed five percent of the insurer's assets" making it a challenge to make investment profits in the lone star state creating the necessity for predictive modeling for investment analysis, machine learning or artificial intelligence in order to visualize statistics and returns and train the application and analysis of models for investment managers.
To underwrite risk, accurate predictive models and analysis software is required to build risk assessment models, a few public data analytics and management firms that enable insurers and reinsurers to assess their own data such as Palantir with its' partnership with Swiss Re. These types of partnerships seek to improve efficiency, reduce risk and optimize workflow in order to have a lasting impact on the insurance industry through leveraging data. Both firms have their own software and data platforms for various business sectors to address risks while having their own nuances. What makes the Swiss Re- Palantir partnership interesting is that Swiss Re created an analytic data model: Stargate to pool data, predict and assess likeness of events such as climate change and implement strategies to mitigate unexpected events in the ever-changing world. In a changing world especially where black swan events occur more frequently as a result of geopolitical tensions, global outbreaks, economic shocks and unprecedented global risks, data has become gold and the integration of new and accurate data is a necessity in adapting with changes and helps mitigate or modify new and unseen risks. Like the paintbrush, canvas and paint is to an artist; the predictive model and data are to the underwriter (actuary and data scientist) in order to model, assess and determine whether to write a policy or potential covenants and specific performance to receive coverage.
As an investment manager one's own analysis will drive investment decisions along with a firm's risk-taking allowances and restrictions placed on their investment teams. In order to view trends for investment capital allocation to hedge the risk of loss and as an additional revenue stream, predictive models will improve investment performance where an investment manager or his team missed during their own analyses or team conversations. A good investment manager and portfolio risk manager will stress test the firms variety of scenarios to optimize a portfolio and investment allocations to maximize return and minimize risk, additionally to adhere to internal risk management concerns and in order to be compliant with regulatory requirements. One financial data analysis project that was required to be done for an Investment Management course gave five years of monthly returns data to the students to come up with their own analysis to create their optimal portfolios and allocations within nine different assets (specifically securities and bonds). In essence, the project served as a means to show how a predictive model will assign distributions to maximize the Sharpe ratio (maximize return and minimize variance). Optimally a keen student that took the course would apply the same analysis to stress test their own portfolios in order to maximize risk management and reduce personal bias which contaminate portfolio returns, returning to an investment manager if there is market bias with a specific security which has corrected off of fear rather than financial results, industry data and the upper management of a target investment. An investment manager and his team should capitalize off of the discount the market is giving the team or reevaluate with the current market valuation which has been "priced in" like that which occurred during March following the collapse of Silicon Valley Bank and reallocation out of middle market and regional bank stocks like Zions Bancorporation (to cherry-pick) which fell to a market value of 60% of what it was prior to SVB's failure and is still trading around that value a month later. In order to integrate such volatility a conservative approach must be taken in to reasonably assess risk when financial modeling and realizing risks involved within an opportunity, risk must be known and continuously assessed in order to prevent failures, collapses or terrible investment decisions that could lead to a portfolio to cannibalize itself and disable excessive risk taking and mitigate any negative snowball effects on the investment managers' team and the insurer.
In order to maintain competitive edge and aid in management decisions, underwriters utilize machine learning to automate data collection, cost identification for claims processing and artificial intelligence to improve underwriting processes through automation, workforce training- augmentation. In essence machine learning is the process a machine, system or algorithm learns through integration and immersion of data to examine and assess it to the needs of its' owner or operator. By utilizing machine learning, certain processes can be automated away which allows underwriters, actuaries and data analysts to be focused on inputs and tooling data models for more effective and time efficient results creating an interdependence of data for operations and with a firm's workforce. As a result of implementing machine learning processes to data models and internal programs will lead to network effects creating a machine augmented workforce which will be more efficient at their jobs while optimally reducing their amount of 'grunt' work in cost identification along with other claims processes. While machine learning is important, it is a component of artificial intelligence which is frontier technology that is industry agnostic for implementation. The industry is being heavily invested in by various firms with technology firms taking the lead such as Microsoft and IBM, the global AI market to grow to $407 billion in 2027 from 2022's $86.9 billion. The nature of artificial intelligence is quite agnostic to where it has enterprise-wide application and can be molded into a sophisticated tool as long as it is programmed, trained or coded to the hearts' content of an operator. In the case of underwriters, data scientists or analysts and actuaries artificial intelligence can analyze processes to train its' operator and itself through data analytics, processing data and being trained to become more efficient and effective at their jobs. Artificial intelligence in this case could be utilized to discover flaws in a network, manage a firms' operation and help visual effects of operations data to discover ESG efficiencies and inefficiencies while not destroying a firms' value. As a result, one would expect an artificial intelligence to have a firm's ethics values integrated into its' programming and hopefully constraints which prevent the artificial intelligence from 'going rouge' like in several science fiction stories. While pondering on artificial intelligence is scary at times the current state of artificial intelligence is nowhere near Terminator and hopefully the firms developing artificial intelligence place constraints to limit how far the technology it will develop while being able to understand how to measure and oversee the technology's self-improvement and development. The drawbacks to not implementing machine learning and artificial intelligence will impact customer attrition and retention, effective ratemaking and operations reactivity which would have all improved with the tech's implementation.
Naturally since machine learning and artificial intelligence will be used to aide and automate underwriting functions currently and will expand in the future, the same can be said for determining investments as an investment manager. Just like underwriting, machine learning can automate investment actions and components of investment analysis which investment managers will want to automate to refine their investment teams' focus on pitching investments and provide value to the overall portfolio. In a way, investment managers could reduce the size of their teams while also maximizing the skills of the overall whole. By utilizing machine learning an investment manager could oversee inefficient stock trades, options, futures, swaps and other investment tools in order to supplement and bolster an insurer's profitability. By being able to visualize and eliminate inefficient investments, investment managers will be able to maximize the portfolio's return by risk reduction and eliminate risks that may have existed within a portfolio. While the investments stated may make up an investment manager's portfolio, investments are restricted dependent on the state of operation as each state has its' own legislation and restrictions on investing operations as an insurer. While the effects of machine learning are more tangible the overall implications of artificial intelligence are broad as the industry and technology are in their infancy. While certain applications of artificial intelligence are speculative an artificial intelligence can act as a financial advisor, automated "Robo" investor like Q.AI (which Forbes holds a stake in), conduct thorough research and a variety of other applications for investment managers and their teams. Naturally artificial intelligence will be able to analyze all available information faster than an analyst but it may overlook certain investments and opportunities where panic and chaos become "priced in" a soundly operating firm which potentially will lead to a lower return than a human would have while both would operate within their own allowances to control risk and portfolio allocation. While artificial intelligence may miss some no brainers during volatile markets it is still a necessary instrument in an investment managers' toolbox.
Pandora's box has been opened and there is no going back with business necessity and implications of integrating artificial intelligence into a firms' operations. The application of predictive modeling, machine learning and data analytic applications are a necessity to insurers and their investment managers. While the artificial intelligence industry is only in its' infancy, it will remain in the publics' spectacle as a tool for rapid technological development and economic progress. We can only wait to see if the concerns with artificial intelligence are warranted due to potential mass labor displacement where some individuals fear we could go too far while their opposers see artificial intelligence as the next technological step. Either way reality will lie between the pessimists and optimists views and speculations of artificial intelligence as it is a digital nuclear bomb. It only feels appropriate to close with Oppenheimer "we knew the world would not be the same" and if artificial intelligence develops unconstrained, we will become our own destroyers.
Research I run for myself, not advice. I am not a licensed financial advisor. Reproduced word for word as submitted in April 2023, so its figures, forecasts and positions reflect that date rather than a current view. Act on it and the risk is yours, not mine.
The one that started it. The assignment was open-ended — design an insurance firm, go from there — and what came back was three functions under one roof: underwriting, risk consulting, and a captive investment group, with the investment arm free to become an asset and wealth management business if state law constrained it. That is the structure the firm ended up being built on. Written and signed as the founder two years before there was one, and the only paper in four years to come back with a 100 on it.
Reproduced verbatim · written May 2023
Being hired by a group of Bauer graduates who are private equity investors I have been assigned to study the feasibility of starting up a new insurance company offering personal lines' insurance products to current Cougar students and alumni, along with commercial insurance policies for small businesses run by UH alumni.
Naturally when starting a business there are external and internal constraints and barriers of entry to achieve our goal of being a soundly operating insurer. Every business owner will face challenges and will need to find a way to conquer them or at minimum survive by being profitable. External constraints that any insurer will face are regulation, rating agencies such as Moody's and S&P, public opinion, competition and economic conditions which all influence operations, financial performance and market share. Additionally, there the internal constraints of inefficiency, lack of experience, firm size, financial resources and other internal constraints such as a damaged brand reputation. In our case we need to be aware of both and the barriers to entry especially as a up and coming insurer including how we financially structure our firm so that we earn a profit, along with meeting customer needs, legal compliance, diversifying risk and fulfilling our duty to society.
In being profitable there are a variety of ownership structures for an insurer to be formatted in, such as a proprietary or cooperative insurer along with pools and government insurers. Since we will be started from the ground up, I believe we should be a proprietary insurer in order to generate a return to the private equity investors along with receiving capital initially. By being owned by the private equity investors in part, we can utilize their existing networks to source talent and capital initially and potentially go to the public markets during capital crunches and raise capital when necessary. An additional benefit of being a stock insurer is that their investment value may appreciate with the stock value on top of any dividends (if a dividend is issued). Lastly the most beneficial part of being a proprietary insurer is that we could participate in an insurance exchange like the American Lloyds' to underwrite any insurance or reinsurance bought at the exchange. As a member there is the perk of limited liability, belonging to a syndicate along with the delegation of operations to a syndicate manager. For our licensing status we intend to be a licensed (admitted) insurer to operate in Texas, starting in Houston and expanding as we are able to.
In order to stay in operation, maintain a market share and expand we will initially use independent agencies and brokers then shift over time into a combination of direct writing and exclusive agencies. This structure would be to expand initially then "lock in" insureds through perks, discounts and benefits to our existing clientele. In order to expand naturally and get into the eyes of potential insureds we need to advertise. In doing so we would run commercials, run ads in the Houston chronical, social media and the sort for personal lines and advertise through word of mouth, direct to consumer for small business owners, syndication through Lloyds along with group marketing and financial institutions for our commercial lines as we are targeting two different types of customers.
To reach our goals we will financial and performance goals which we will measure through revenue from premiums and investment income. We will strive to beat or meet market returns annually on investments with what we are restricted in investing and holding while striving to have earned premiums, underwriting performance and operations efficiency grow by a rate of 2% for earned premiums and a rate of 5% or greater annually for the other components, this is to stay efficient and lean while expanding as needed. Metrics we would use to track performance would be return on investments/assets/equity, our enterprise growth rate, loss ratio, expense ratio, combined ratio, net income and internally review quarterly and annual financial audits to oversee any changes or outlier activities that may incur during operations. In our operations we would like to have a loss ratio below 80% and optimally as close to 50% once we are established to maximize shareholder and societal returns while being profitable and setting aside a portion of our profits for our reserves to pay claims and dividends.
To differentiate ourselves we will have a risk consulting function along with a captive investment group or private equity function to capture additional profits via investment income and capital appreciation. It is important to have additional functions if the firm would like to start as an insurer, then grow and mature into a vertically integrated financial services group to capture our market of Houston while also not constraining ourselves to one type of business. Having three functions will not only benefit our shareholders but also our insureds build trust and reserves that no matter what happens to an insured we can guarantee coverage via our cash reserves, capital set aside for claims and allowing our quarterly and annual financials publicly accessible. Pricing will vary based on a firm's or individual's scenario and priced appropriately based on the all risks being underwritten, consulting will vary as well but initially be priced at either a flat fee of dependent on the size of a firm or 2% of the gross benefit a firm sees after implementing any or all recommendations, and the investment function will also vary but easily grow into an asset and wealth management arm if investment returns and opportunities are too constricted by Texas law and must pivoted.
As an insurance firm based in Texas, we would be regulated by the Texas department of Insurance, to keep in mind the NAIC and other regulatory bodies for our supporting functions. Regulation is a necessary part of operating and important to keep us in check with regulatory requirements and for our insureds, if we fail everyone that relied on us loses. To get approval for policies we will work with our regulators along with our initial Cougar alum investors to start then operate on our own unless a regulatory conflict occurs. In the future the approval for rates and policy structures will depend on the state where we expand and the holistic view of the risk environment that comes with operating in the state, we would like to extend our services to. If we were to go insolvent, we would honor our claims and work with regulators to cover outstanding policies and get portions of our book acquired by a 'rival' firm to survive or even acquired above or near book value as our debt or claims expenses probably cannibalized our firm.
To ensure compliance we will have our own guidelines which will be outlined in our own code of ethics and underwriting handbooks. These guidelines must be followed and adhered to in addition to state requirements. Naturally to oversee performance and financial results we would conduct premiums audits along with financial stress testing for liquidity purposes. In order to see whether we are appropriately pricing premiums we will conduct premium audits, the purpose for premium audits will seek to bolster our position in a competitive market along with showing that we audit ourselves and are transparent with the pricing of our premiums. On top of those metrics, we will measure our claims department's performance via claims diaries and logs, access security and authority levels and claims tracking systems. We will also have supervisor and manager reviews and audits to improve their performance. Lastly, we will perform claims audits (internal and external) to review and verify if claims were appropriately handled.
For ratemaking we will generate rates through the pure premium, loss ratio and judgement methods. The combination of the three is appropriate as in order to offer our services we have to look at some of, as many or all the risks we can determine to acquire business in our appetite while keeping sustainable expansion in our view. We will not reinsure initially as it opens us up to more risks, but depending on circumstance we would consider syndicating and pooling risk but only as a participant and not spearheading the transaction. In the future if we are adequately liquid and capitalized, we would reinsure a niche market and specialize in energy as a Houstonian firm.
To provide an overview of us a proposed insurer we would like to provide a Swot analysis on ourselves. A strength of our business is our enterprise vision, focus on our core insurance functions and commitment to insureds that their policies will be honored if we fail. One of the weaknesses we have is auditing and the regulatory environment and inflation eating away at profits. We believe that while necessary our own audits may hinder operations when they are occurring which may affect financial performance. An opportunity we have is horizontal integration which we could pursue as an insurer and grow into a financial services group to bolster our bottom line financially, grow and improve what services we can provide while reinvesting in ourselves. Naturally we are threatened by competition and want to stay competitive and become a stalwart and not disappear and solely compete away either of our profits. We seek to differentiate ourselves as a Houstonian customer obsessed insurer that becomes horizontally integrated to offer services like asset management, wealth management, potentially banking, risk consulting and a variety of necessary functions to solidify and diversify our services and revenue streams.
As the founder of our firm, I wish we appropriately conveyed our vision and are seeking seed money and hopefully partners to help us achieve our enterprise goals, we believe it can be achieved in time through our focus on customers and expand into a goliath.
Research I run for myself, not advice. I am not a licensed financial advisor. Reproduced word for word as submitted in May 2023, so its figures, forecasts and positions reflect that date rather than a current view. Act on it and the risk is yours, not mine.
Written the night before a final-round interview with the C-suite of a registered investment advisor — nobody asked for it. Put together in one sitting so there would be something on the table besides answers. Kept here as a reference for what a market read looked like at the end of August 2023.
Reproduced verbatim · figures as of Aug 31, 2023
Research I run for myself, not advice. I am not a licensed financial advisor. Reproduced word for word as submitted in August 2023, so its figures, forecasts and positions reflect that date rather than a current view. Act on it and the risk is yours, not mine.
A monkey with a dartboard, formalised.
Spin the wheel and draw a name out of the S&P 1500. The wheel is carved by sector at the index's own weights, so every company in the drum has exactly the same chance of coming up. No skill, no thesis, no edge: just the null hypothesis with a nicer interface. It is the bar every other concept in the Lab has to clear.
Research I run for myself, not advice. I am not a licensed financial advisor. A random draw is a benchmark, not a strategy, and a wheel has no view on any company it lands on; the constituent list is a static snapshot, so a name here may since have left the index, merged away or been renamed. Act on it and the risk is yours, not mine.
| Ticker | Company | Sector | Tier | Weight |
|---|
Constituents: a static snapshot of the S&P 500, Midcap 400 and Smallcap 600 with GICS sector and tier. No prices, no fundamentals, no returns, and nothing fetched live.
And liquidity automation. How do we manage money? Income comes in, expenses go out, and what is left is invested. Systematized capital management puts that on rails: a fixed set of accounts with money moving between them on its own, so the decisions that need a person shrink to almost nothing.
Managed by hand, money follows three things: the mental models you bring to it, your cost of living, and the situation you are in.
Automation simplifies input needs. Set the flows once and the system handles the routine moves.
Research I run for myself, not advice. I am not a licensed financial advisor. This is a personal framework sketched in August 2024, not a plan fitted to anyone else’s income, taxes or accounts. Act on it and the risk is yours, not mine.
Replicate futures trading with forecast events. A forecast event is a Yes-or-No contract on a single number — will USD/JPY settle above 159.25 on Friday — and the Yes price is the market’s probability, quoted in cents. A ladder of those strikes carries the same view as a futures position, with the most you can lose fixed at entry.
Eighty-two daily sessions of USD/JPY to April 24, 2026: the intraday high-low, the open-close, and a regression of the close on the day’s open, high and low.
Visualizing gut feeling with data: the ForecastX ladders for April 23 and 24, set against where the pair actually closed.
| Session | Contract | Yes, cents | Close | Settled |
|---|---|---|---|---|
| Apr 23, 2026 | Above 159.00 | 60 | 159.73 | Yes |
| Apr 24, 2026 | Above 159.25 | 85 | 159.37 | Yes |
Research I run for myself, not advice. I am not a licensed financial advisor. The regression uses each session’s own high and low, so it describes a finished day rather than forecasting the next one. Act on it and the risk is yours, not mine.
A refined vision for the brand: publisher first, studios merged by DNA, and an action plan for the IP vault. Xbox should be a game publisher and curator that happens to sell consoles.
I grew up playing a variety of games, and I look at a business as an investor and independent trader — with an owner-operator’s rationale. I got my first Xbox at ten. The thesis: a mismanaged brand that should be the home of gaming, built on Game Pass and a PC-native experience.
| Year | Event | What it meant |
|---|---|---|
| 2021 | ZeniMax / Bethesda, $7.5B | The Elder Scrolls, Fallout, Doom and Dishonored enter the vault |
| 2023 | Activision Blizzard King, $68.7B | Call of Duty, Warcraft, Diablo, Candy Crush |
| 2024–25 | The bill arrives | Tango, Arkane Austin, Alpha Dog and The Initiative closed; Perfect Dark and Everwild killed |
| 2026 | The reset | Four studios out, 3,200 roles cut, Arkane Lyon in limbo |
The verdict. A schizophrenic, underused war chest of assets: talent and IP sit idle while studios are shut down. Trim the fat and take risk. Every IP should be in use, or on the market.
Good, profitable experiences built by merging the best talent into genre houses — one studio group per genre, with several teams running projects inside each. Imagine a Halo by id Software.
| House | Studios | Flagship IP |
|---|---|---|
| Shooter | Halo Studios, The Coalition, id, the Call of Duty studios | Halo, Call of Duty, Doom, Gears of War, Wolfenstein |
| RPG | Bethesda Game Studios, Obsidian, inXile, Arkane | The Elder Scrolls, Fallout, Starfield, Fable, The Outer Worlds |
| Racing | Playground, Turn 10 | Forza, Project Gotham Racing |
| Worlds & Live | Mojang, Rare, Blizzard, King | Minecraft, Warcraft, Overwatch, Sea of Thieves, Candy Crush |
| Strategy | World’s Edge and the classic RTS teams | Age of Empires, StarCraft, Warcraft RTS |
| Arcade & Family | Revival specialists | Crash Bandicoot, Spyro, Banjo-Kazooie, Tony Hawk’s Pro Skater |
| New IP Lab | Elsewhere Entertainment and the archive | One sitting IP reinvented every year |
| Path | Rule | Examples |
|---|---|---|
| Use | Quarterly cadence: rotate vault IP into production so something ships from the vault every quarter | Perfect Dark revival, Banjo-Kazooie, StarCraft to the Strategy House, Crackdown as a Game Pass live title |
| Sell | No strategic fit: IP that will never anchor the brand becomes cash and goodwill in someone else’s hands | Prototype, Singularity, the Sierra adventure catalog |
| License | Partners build, Xbox owns — the Toys for Bob model | Spyro and Crash to platformer specialists, Guitar Hero to a rhythm-game developer |
Research I run for myself, not advice. I am not a licensed financial advisor. This is an outside-in design exercise built from public reporting, not inside knowledge of Microsoft’s plans, and it is not a view on Microsoft stock. Act on it and the risk is yours, not mine.
Ideation is where a thesis gets written down, weighted, and then held to a public record before any of it is traded. Futuresight is the first concept in the series.
A thematic basket built from the technology that science fiction got specific about — autonomous weapons, machine intelligence, cyberware, brain interfaces, seabed mining, the data brokers, and the petrochemical layer underneath all of it. Every company is listed once, in the industry it plays into most, and tagged with the risk factor that actually moves its price.
Calling it what it is: this is speculation, and a basket built on sentiment is closer to gambling than investing. The bet is that the story gets more expensive, not that the cash flows show up. Roughly one name in five has no earnings underneath it. Tracked forward from the open on at fixed weights, with no trading and no hindsight. There is deliberately no backtest here: the roster was picked in August 2026 knowing what had already happened, so a historical curve would measure hindsight rather than skill. Research I run for myself, not advice. I am not a licensed financial advisor. Act on it and the risk is yours, not mine.
| Industry | Names | Dominant factor | Weight |
|---|
| Ticker | Company | Factor | Weight | Return |
|---|
Seventeen industries collapse into eight factors. The matrix below is the honest reason that matters: it is computed on trailing daily history, because correlation measures how these move together rather than how well they were picked.
| Factor | Names | Weight | Return |
|---|
The opposite instinct to Futuresight. Futuresight buys a story; this buys a balance sheet nobody wants.
A screen of the entire US market for companies trading under 3× sales and under 1× book, ranked by cheapness against quality, with the value traps that fill a raw price-to-book list flagged rather than hidden. Everything comes from free data with no API key.
Same footing as the first concept: research I run for myself, not advice. I am not a licensed financial advisor. A screen is a starting list, not a conclusion — it says a company is statistically cheap, never that it is a good business or that the cheapness is wrong. Cheap usually means the market knows something. Act on it and the risk is yours, not mine.
| Flags |
|---|
One screener call filters the whole US market server-side on price-to-book, price-to-sales, market cap and volume, with a guard requiring positive book value per share — a company with negative equity also satisfies "P/B under 1", and those are the first thing a naive screen fills up with. A second call re-runs the same filter with Altman Z above 1.8, and anything missing from that set gets flagged. Per-name fundamentals and Form 4 insider filings are then pulled for each survivor.
Fixed scales, so a 70 this month means the same as a 70 next month. The weights below sum to more than a hundred on purpose: each name is scored only on the components it actually has data for, and those are rescaled to a hundred between them. For banks and insurers the Z-score, current-ratio, cash-flow and return-on-invested-capital components all drop out, because none of them mean anything against a balance sheet built that way.
| Weight | Component | 0 points | 100 points |
|---|
| Flag | Meaning |
|---|
Form 4 filings over the trailing 180 days. Roughly 60% of a raw transaction list is stock awards, gifts and option exercises — compensation, not conviction — so only rows labelled Purchase count, and only rows labelled Sale count against them. Heavy means three or more insiders bought at least $50k between them, or purchases worth over 0.1% of market cap, and buying exceeded selling. This sits beside the score rather than inside it, so the score keeps meaning the same thing run to run.
Yahoo divides a USD market cap by local-currency revenue and book value for foreign issuers, so a Korean utility reporting in won screens at 0.2× book and a Chinese lender at 0.07× sales. Those names dominate a naive screen and every one is an exchange-rate artifact. They are detected and excluded by default.
Book value is a balance-sheet number, not a liquidation value: goodwill and intangibles inflate it, so check what the book is actually made of. Sub-1× book is the normal resting state for banks and insurers, not a signal. Ratios are trailing twelve months while book value is most recent quarter, so a company that just cratered looks better here than it is. And the data is Yahoo\u2019s — a stale share count after a merger produces a market cap, and therefore a P/S, that is badly wrong. Sanity-check any individual name before acting on it.
This one sits between Futuresight and the Value Scanner. Futuresight buys a story and the Value Scanner buys a balance sheet nobody wants; this one looks for a business that is already working and asks whether the market has noticed yet.
A screen for companies expanding operations accretively — where capital newly put to work earns more than the capital already there — scored across seven pillars covering growth, margins and returns, cash generation, balance sheet and liquidity, capital allocation, valuation, and how thinly the name is held and covered. That last one is the tilt: a good business every fund already owns and twenty analysts already model is a worse idea than the same business nobody is writing about.
Research I run for myself, not advice. I am not a licensed financial advisor. A screen ranks what is measurable in a filing, which is never the whole question — it cannot read a management team, a contract, or a competitor. Trailing fundamentals also cannot tell operating progress from a commodity cycle, which is why producers are flagged rather than quietly ranked. Act on it and the risk is yours, not mine.
| Flags |
|---|
Every name scored on each pillar out of 100, then weighted into the headline number. A component with no data is dropped and the remaining weights re-normalised, so a missing figure never quietly scores as a zero. Sort any column to see what the screen is actually rewarding.
One screener call filters the whole US market server-side, so the gate costs a single request no matter how large the universe. The published profile wants a business already earning: revenue growing, return on equity above the threshold, free cash flow positive, interest covered several times over, debt under control, and a multiple that is not already heroic. A second profile inverts it for companies not yet profitable — fast growth at a high gross margin with a net-margin ceiling and a balance sheet that can fund the wait — because a screen that only ever finds finished companies never finds one early.
| Gate | Threshold |
|---|
| Weight | Pillar | What it measures |
|---|
The question a growth screen usually dodges is whether the growth was worth buying. The measure here is incremental return on invested capital: the change in after-tax operating profit divided by the change in invested capital over three years. If new capital out-earns the existing base, the company is compounding rather than just getting larger, and the row is flagged. It is only computed when invested capital actually moved more than 5% — on a flat capital base the ratio is dividing noise by noise. Growth paid for by issuing stock shows up as dilution; growth paid for out of cash while the share count falls shows up as a buyback.
The acid test alongside current and cash ratios, interest coverage and net debt to EBITDA. On the pre-profit profile, cash runway carries most of the balance-sheet weight, because for a company still burning it is the number that decides whether the thesis gets time to play out. The regulatory bank measures — LCR, NSFR, CET1 — are in no free data source, and corporate liquidity ratios mean nothing against a bank balance sheet anyway, so for banks and insurers those components are dropped and the rest re-weighted rather than reported wrong.
| Flag | Meaning |
|---|
Left alone, this screen fills with gold and silver miners. Their three-year growth, margin expansion and returns on capital are all genuinely excellent, and all of it is the metal price rather than operating progress. Trailing fundamentals cannot tell those apart, so producers carry a flag instead of being quietly ranked as compounders. Read a flagged name as a snapshot of where the cycle is, not as a trend.
Return on invested capital here uses operating income after a flat statutory tax against reported invested capital — a proxy, not a modelled cost-of-capital comparison. Compound growth rates come from four annual filings, so the window is three years at most and shorter for anything recently listed. Institutional ownership above 100% is a real artifact of securities lending rather than a bug. And the underlying data is Yahoo\u2019s: it is occasionally wrong on individual names, so verify before acting on any of it.
Mandate & Constraints