The Bid & Ask

Quotations, Dispatches, and the Daily Tape

Thursday, August 13, 2026

The Method

Why we don't churn the holdings

A name that drops just outside the cut is kept in the portfolio. Only a real fall pushes it out.

If the rule were “always own the top-ranked names today,” every tiny wobble in the scoring would mean selling one stock and buying another — paying spread and racking up tax events for what is essentially noise. Instead, once a name is in the portfolio, it gets a margin of safety: it can drift several places below the cut and still keep its slot. Only when a held name falls clearly out of contention do we replace it — and then it's replaced with the highest-ranked candidate currently outside the book. In testing, this rule alone cut the number of trades by more than half without giving up returns. The portfolio looks calmer, trades less, and lets winners keep working.