Understanding the Ratings

New ratings normally compare the investment with SPY over twelve calendar months. We weigh relative reward, potential loss, evidence quality and whether the expected value can be realized within that period. Any different horizon must be explained in the report.

Ten Levels of Investment Judgment

Choose a level to see what it means for existing holdings and new money.

1–4 · Reduce exposure5 · Consider other opportunities6–10 · Buying supported

Scores 1–4 require evidence favoring reduced exposure. At five, continued ownership may be reasonable, but the completed assessment has not established enough advantage for new purchases. Scores 6–10 support buying with increasing conviction. These judgments do not determine trade size or require a trade.

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, a credible path to realizing value within the stated horizon 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, 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 reference price, research cutoff and investment horizon behind its rating. SPY is our primary comparison for total return over the same period, normally twelve calendar months for new ratings. We account for distributions, costs, currency and differences in risk. Neither return is certain. We also consider an appropriate Treasury and an available insured certificate of deposit (CD), including their terms, limitations and availability. An expected advantage over SPY does not by itself establish an adequate absolute return or cash available for investor distributions. Valuation projections may extend beyond the rating horizon, but that does not extend the period being judged. Historical ratings retain their original horizons and comparison terms; we do not change them 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 explain how value could reach shareholders—through cash distributions, productive investment or another credible route—and whether that path is credible within the stated horizon. We consider what happens if an expected development arrives late or never. A favorable long-term valuation alone is not enough to support buying over a shorter horizon. We explain why the rating fits better than its neighbors. The score is a judgment across relative reward, potential loss, evidence quality and timing, not an average of numerical subscores. A precise forecast or return cutoff cannot decide it; calculations and source checks still need to be rigorous.

A completed company study receives a defensible rating. Preliminary screens do not receive scores, and unresolved material defects prevent completion. When important evidence is missing, we explain the gap and assess its consequences rather than automatically treating it as a reason to buy, hold or sell. Missing evidence does not establish the worst case, and the absence of a buying case is not enough to justify reducing exposure. Five is a completed judgment, not a placeholder for unfinished research.

What Could Change Our View

Each report explains which business developments, new evidence or price changes would alter our recommendation. In assigned reassessments, normally quarterly, we revisit assumptions and distinguish new evidence from errors. That review cadence does not turn the stated rating horizon into a 90-day price forecast or promise continuous monitoring. Business forecasts retain their own stated tests; meeting them does not automatically earn a higher rating. Correcting an error does not by itself advance the research cutoff; it advances only when the analysis incorporates a later information cutoff.

What a Rating Cannot Tell You

The score is not a predicted return, probability, 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. Our fund's cash needs, holdings, concentration, position sizes and investor distributions do not change the research score. Fund actions require a separate decision; a rating is not an order, allocation or distribution promise. The holding and buying guidance above describes the research judgment. Your circumstances determine whether an action fits your portfolio.

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