Our Discipline

dis∙ci·pline (dis-uh-pline) noun noun: discipline; behavior in accord with rules of conduct; behavior and order maintained by training and control.

The Discipline we impose is one that was designed to try to help minimize the negative effects of a deep or protracted downturn in the various markets that we utilize to manage our client’s investment holdings. By keeping our position numbers to a minimum, 0-25 the concentration allows us to purchase more issues in round lots. This provides us the opportunity to utilize both covered calls as well as cash secured puts to help provide both cash flow from premiums as well as predetermined entry and possible exit points. No one equity position is purchased at a value greater than 3% helping minimize damage should the holding go awry. It does not, however, protect the client from experiencing losses in a market correction.

Core vs. Explore

core (kor) noun Noun: a central and often foundational part usually distinct from the enveloping part by a difference in nature

A “Core” holding to us is defined as a position that based on our current information and tested against our 3 (three) fundamental questions offers us a long-term opportunity in relationship to our overall plan of action. These positions have an expected holding period of 3 years or more. In the event of a downturn in the Core position we use the situation as a buying opportunity to help lower our original cost basis. Core positions are continuously monitored against our Process to determine its ability to maintain Core status. In the event of a violation of the fundamentals the Core holding will be moved into the Explore category and treated under the Explore discipline.

explore (ik-‘splor) verb Verb: to look at (object) in a careful way to learn more about it: to learn (something) by trying it

An “Explore” position is taken strictly on the basis that it can add value to our Core holdings. We call this adding “Alpha”. The intended holding period for an Explore position is between 1 day and 3 years. In the event that an Explore position should either gain value or lose value determines its daily treatment in our portfolio. The breakdown below details how our Discipline works in regards to value fluctuations of Explore holdings.


Purchase 100 shares (XYZ) at $100.00 per share. XYZ gains in value by 33%, we liquidate 1/3 of the position. XYZ gains an additional 33%, we liquidate 1/3 of the position (this equals our original cost basis)
Remaining shares of XYZ are held in the portfolio until it violates the downside parameter, or we identify a better opportunity.


Purchase 100 shares (XYZ) at $100.00 per share.
XYZ violates is “explore” fundamentals it is automatically liquidated from the portfolio. The position will not be eligible to re-enter our portfolios for a minimum of 35 days after a liquidation.