Two systems, one discipline
The decision and the explanation answer to the same record.
The Investment Policy Statement governs the portfolio. The Research Standards govern the claims used to justify it. A position can comply with one and still fail the other, so both are checked here.
Objectives, sizing limits, entry and exit rules, trade timing, and the live compliance record.
Read the portfolio rules ↓ Part II · Publication governanceResearch StandardsSources, fact-versus-inference labeling, countercases, consistent methods, and visible revisions.
Read the research rules ↓Purpose
Rules written before the moment of temptation
This Investment Policy Statement establishes the objectives, position-sizing constraints, and accountability standards governing the AEA Capital Research portfolio. Every position is measured against the limits below, and each monthly review reports where I actually stand versus them.
“The purpose of a policy is not to look disciplined. It is to be disciplined on the day the market makes discipline expensive.”
1 & 2 — Objective, Horizon & Benchmark
Long-term growth, measured against SPY
Long-term capital growth over a multi-year horizon. This is capital I don’t need near-term, so I can absorb short-term price swings in exchange for compounding. That tradeoff is also an age-and-overhead decision, not just a temperament one: I’m early in my investing life, with no dependents and no near-term liquidity the account has to fund — exactly the setup where leaning toward high-conviction growth compounders makes more sense than a heavier allocation to bonds or fixed income. A portfolio that has to fund an obligation in five years should be built more conservatively than this one is. I am not trading for income and I am not trying to time the market.
Benchmark: SPY. Performance is measured time-weighted, with deposits stripped out. If I can’t beat a low-cost index over time, the right move is to own more of the index — and to say so plainly.
3
Portfolio structure & position limits
Five buckets, each with its own ceiling. Bucket assignment for every current holding is visible on the Holdings table and the Coverage Book.
Core / Quality Compounders
Profitable or clear path-to-profit large & mid caps. Limit: majority of the book.
Emerging Growth
Smaller operating companies with real revenue. Limit: flexible.
Speculative Sleeve
Micro-caps, story stocks, pre-profit names. Limit: ≤25% of invested capital.
Leveraged / Derivative
Leveraged & thematic ETFs, daily-reset. Limit: ≤5% of invested capital.
Index Hedge
Broad-market ETFs (e.g. VOO, SPY). Ballast, always held.
- Single-position cap: ≤10% at cost.
- Leverage caution: daily-reset leveraged instruments are excluded from long-term holding consideration due to volatility decay; any leveraged position is aggregated with its underlying for single-name concentration purposes.
- Diversification: spread across sectors, and flag single-theme clustering when it appears.
4
How an idea becomes a position
- Written thesis — what must be true for this to work, and which operating assumptions carry the decision.
- Risk case — what breaks it, the competing view, and my honest odds of being wrong.
- Sizing — which bucket it belongs in, and how much.
- Catalyst & review date — what I’m waiting for, and when I’ll re-check.
In practice, every security page carries this as a three-field Investment Thesis: the Catalyst (why now), the Fundamental Case (an objective read of the business), and the Risk Factor (a frank downside assessment). It’s the same discipline as above, just in a format short enough to actually re-read before adding to a position.
5
Sell discipline
- Thesis breaks → exit.
- Position drifts beyond its bucket or cap → trim back to policy.
- Sell to fund a clearly stronger idea.
- Never average down on a broken thesis just to lower the cost basis.
Trading Compliance & Ethics
Two rules about timing, not sizing
Effective July 11, 2026, governing trade timing rather than position sizing. Both are now tracked on the Compliance Ledger alongside the caps above.
The Blackout Rule
No trades — buys or sells — are executed in a position within 48 hours prior to that company’s scheduled earnings release.
Rationale: trading immediately ahead of a known catalyst is a bet on the print, not on the thesis. This rule forces every trade to be justified by the standing thesis, not by trying to time an information event.
The Holding Period
Core-bucket positions are subject to a minimum 30-day holding period from the date of purchase, absent a thesis-breaking event.
Rationale: the Core bucket exists for durable, quality compounders — a minimum holding period is a structural check against reacting to short-term price noise in positions meant to be held on a multi-year view.
6
Accountability
- Monthly performance vs. SPY, published.
- Speculative and leveraged sleeve weights disclosed against their caps.
- Rule breaks reported, with the reason why.
- Holdings Blossom-verified; the policy itself reviewed quarterly and updated openly.
Every cap above is checked against the live portfolio on the Compliance Ledger — a running scoreboard, not a one-time claim.
Part II · Research Standards
Make the work checkable.
If a reader cannot tell where a fact ends and my judgment begins, I have not done the job. These standards keep sources, uncertainty, countercases, and later revisions visible.
- 01SourceWhere did the evidence come from?
- 02ContextWhat does the number leave out?
- 03CountercaseWhat would make the other side right?
- 04DecisionWhat action does the evidence support?
- 05RevisionWhat changed after publication?
R1 · Anatomy of a claim
Fact, inference, and decision do different jobs.
They can live in one paragraph. They should not be allowed to impersonate one another.
“AMD’s Data Center revenue grew, hyperscalers have an incentive to support a second supplier, and I will keep holding only if deployment evidence continues.”
- Fact
- Reported Data Center growth, tied to the filing or earnings release.
- Inference
- Buyer incentives may help AMD. Plausible, but still my interpretation.
- Decision rule
- Hold only while deployment evidence and the growth trigger continue to support the thesis.
R2–R8 + R10 · Eight working rules
The standard is only real where it leaves a receipt.
Each rule points to the part of the site where a reader can test whether I followed it. No trust-me footnotes.
- R2
Start with primary material.
Filings, earnings releases, transcripts, and official data come before commentary.
Enforced in Sources & Research Log → - R3
Label inference as inference.
A reported number and my explanation of it are not the same kind of evidence.
Enforced on security pages → - R4
Write the countercase before the outcome.
Every thesis needs a serious bear case while I still have something at stake.
Enforced in the Coverage Book → - R5
Disclose the position and the limits.
Readers should know what I own, what I may be biased toward, and where the data stops.
Enforced in Disclosures → - R6
Revise without erasing.
New information can change the conclusion; it should not quietly delete the old reasoning.
Enforced in Post-Mortems → - R7
Apply the same method to every name.
A favorite stock does not get an easier test because I would prefer the thesis to survive.
Enforced across the research tools → - R8
Show downside math, not just upside story.
Valuation work should make the bad case visible before the price makes it obvious.
Enforced in Risk X-Ray → - R10
Date the fact and the review separately.
A market close, filing period, or economic release date says when the evidence is from. A review date says when I last checked the page. Neither may impersonate the other.
Enforced in the correction ledger →
Daily Desk Protocol · Effective Sep 15, 2026
Report first. Interpret second. Never manufacture the close.
Daily publishing is useful only when the timestamp, evidence, and uncertainty survive the deadline.
- 01
Time-stamp live data. Intraday prices are labeled intraday; a closing return is published only after the close can be verified.
- 02
Lead with the material fact. The headline and opening paragraph should tell the reader what happened before explaining why it may matter.
- 03
Use a primary-source floor. Official releases and company filings anchor material claims; secondary reporting supplies context, not borrowed certainty.
- 04
Keep news and opinion separate. Reported developments belong in News. AEA’s interpretation is signed, labeled, and published in Opinion.
- 05
Leave the unknowns visible. Unconfirmed causes, unfinished sessions, and evidence that would change the conclusion stay on the page.
R9 · From claim to record
How a claim earns its place on the site
- A
Pull the primary number. Save the source and date before drafting the sentence.
- B
Cross-check it. Use a second source where the fact is material to the thesis.
- C
Write the uncertainty in. State the assumption instead of polishing it out.
- D
Date and re-check. Revisit the claim when the next filing, event, or decision arrives.
A note on certainty: a detailed model can still be wrong. Precision is useful when it exposes assumptions; it becomes decoration when it disguises them.
Not Policy, But Part Of Why It Exists
Quotes I keep coming back to
These are the lines I actually think about when a position is down double digits or the whole book is red on a day the index isn’t.
“Be fearful when others are greedy, and greedy when others are fearful.”
— Warren Buffett
This is the one I reread every time a position sells off on sentiment rather than fundamentals — the July 7 chip selloff being the most recent example. It’s easy to nod along to this quote in the abstract and much harder to actually act on it when the position that’s down is your own money.
“In the short run, the market is a voting machine. In the long run, it is a weighing machine.”
— Benjamin Graham
This is the quote behind the distinction the Disclosures page insists on between the home page’s illustrative, indexed-to-100 chart and the account’s real, dollar-weighted all-time return.
“The big money is not in the buying and the selling, but in the waiting.”
— Charlie Munger
The single hardest rule in this entire policy to actually follow. Every letter that says “no position changes from this” after a rough week is this quote in practice.
“Know what you own, and know why you own it.”
— Peter Lynch
This is the entire reason every position on this site carries a written Catalyst / Fundamental Case / Risk Factor thesis instead of just a ticker and a return number.
“Don’t look for the needle in the haystack. Just buy the haystack.”
— John Bogle
The reasoning behind the Index Hedge bucket — SPY, VOO, QQQ, and SCHD are held always, not because I don’t believe in stock-picking but because Bogle’s underlying point is honest: most of the time, most people (including me) don’t beat the index, and pretending otherwise is expensive. The About page’s “beat the index or own the index” line is a direct descendant of this quote.
7
Revision history
This document is reviewed quarterly and updated openly — changes are logged here rather than silently edited in.
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2022 · v1
Initial policy written
Five-bucket structure, single-position cap, sell discipline set before the first position was opened. See the Founding Note for the reasoning.
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Jul 2026 · v2
Formalized the Investment Thesis template
Three fields (Catalyst / Fundamental Case / Risk Factor) added under Section 4. Dropped the policy of withholding dollar balances in favor of full transparency across the site.
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Jul 2026 · v3
Added the Quotes section
A non-normative “Quotes I keep coming back to” section added after Section 6 — personal, not policy, but part of the reasoning behind it.
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Aug 2026 · unified
Brought the Research Standards into the governing document
The portfolio rules did not change. The sourcing, countercase, disclosure, and revision standards now sit beside them so the decision and the explanation can be checked in one place.
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Sep 2026 · v5
Added freshness and private-mark controls
Live claims now carry distinct source and review dates. Private-company marks may not be replayed as daily exchange moves. The change follows two September audit findings recorded in What I Got Wrong.
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Sep 15, 2026 · v6
Adopted the Daily Desk Protocol
Daily articles now follow a defined reporting sequence: time-stamped data, a material-news lead, a primary-source floor, separate news and opinion, and an explicit record of what is not yet known.