Understanding the Ratings
Our ratings express whether an investment deserves more or less of your capital at its current price.
We compare it with investing in SPY over the same period, weighing the potential reward against the risks and the strength of the evidence.
Ten Levels. Two Directions.
Choose a level to see what it means for existing holdings and new money.
The two halves describe direction, not identical trade instructions. Five does not call for an automatic sale; six supports limited additions.
What Each Level Means
Exit
The evidence strongly favors leaving this investment. Even the strongest reasonable case for continuing to own it does not justify the risk and opportunity cost at this price.
- If you already hold it
- Exit the position.
- If you’re considering buying
- Avoid new purchases.
Reduce substantially
Serious disadvantages support a substantial reduction. A limited case for ownership remains, but the balance strongly favors other uses of capital.
- If you already hold it
- Substantially reduce exposure.
- If you’re considering buying
- Prefer other uses of capital.
Reduce
We expect the baseline alternative to offer a meaningfully better balance of return and risk. That conclusion holds under reasonable competing assumptions.
- If you already hold it
- Meaningfully reduce exposure.
- If you’re considering buying
- Prefer the stated baseline.
Trim
The balance favors reducing exposure, although a credible case for continuing to own a smaller position remains.
- If you already hold it
- Reduce to a smaller position.
- If you’re considering buying
- Keep new money available.
Consider other opportunities
We do not see enough advantage to support new purchases. A demonstrably better opportunity may deserve the capital. This is not an automatic sale recommendation.
- If you already hold it
- Continued ownership can be reasonable; consider a demonstrably better alternative.
- If you’re considering buying
- The case does not support new purchases.
Consider buying
We expect an advantage over the stated baseline sufficient to support selective buying. Meaningful uncertainty remains, so restraint and diversification matter.
- If you already hold it
- Consider selective additions within a diversified approach.
- If you’re considering buying
- Selective buying is supported; use restraint.
Buy
We expect a clear advantage over the baseline, supported by strong evidence and a case that remains convincing under cautious assumptions.
- If you already hold it
- Consider adding within a diversified approach.
- If you’re considering buying
- The evidence supports buying at the stated price.
Strong buy
We expect a substantial advantage and have high confidence in the supporting evidence. The case remains attractive when several reasonable setbacks are considered together.
- If you already hold it
- A strong case for additions, with diversification.
- If you’re considering buying
- A strong purchase case at the stated price.
Highest recommendation
An unusually large expected advantage is supported by exceptionally strong evidence, a credible way to realize value and a case that withstands rigorous opposing arguments. This recommendation should be rare.
- If you already hold it
- Give additions high priority within a diversified allocation.
- If you’re considering buying
- An unusually compelling purchase case; maintain diversification.
Rare opportunity
An exceptional, demonstrable advantage gives us our strongest conviction. It depends unusually little on favorable forecasts, and the remaining failure paths have been closely examined. This rating should be extraordinarily rare; it is still not a guarantee.
- If you already hold it
- Our strongest conviction, still within a diversified approach.
- If you’re considering buying
- An exceptional purchase case, without any guarantee.
How to Read the Judgment
What We Compare
Each report identifies the price, date and investment horizon behind its rating. We compare the investment with SPY over that same period, accounting for distributions, costs, currency and differences in risk. Neither return is certain. We keep the original comparison when reviewing results; we do not change it after seeing the outcome.
What Supports the Rating
Higher buying ratings require both a greater expected advantage and stronger evidence. Farther toward Exit means a stronger, better-supported reason to move capital elsewhere. High confidence can support a low score as well as a high one.
We distinguish reported facts from claims and assumptions, test how the case holds up under linked setbacks, and address all material reasonable counterarguments. We also explain how value could reach shareholders—through cash distributions, productive investment or another credible route—and why the rating fits better than its neighbors. A precise forecast or return cutoff cannot decide the score; calculations and source checks still need to be rigorous.
Every report receives a rating. If important evidence that should exist is missing, we give more weight to the downside instead of assuming the answer would be favorable. We explain what is missing and why it matters. Serious gaps can support reducing or exiting; five is not a default for incomplete research. Missing evidence does not make the worst case an established fact.
What Could Change Our View
Each report explains which business developments, new evidence or price changes would alter our recommendation. We revisit assumptions and acknowledge errors. A quarterly review does not turn a long-term investment case into a 90-day price forecast. Business forecasts retain their own stated tests; meeting them does not automatically earn a higher rating.
What a Rating Cannot Tell You
The score is not a predicted return, confidence percentage or portfolio weight, and the steps are not equally spaced measurements. Even ten offers no guarantee and does not justify borrowing or abandoning diversification. These are general investment judgments; the report explains the reasons and limitations, while your circumstances determine whether an action fits your portfolio.