Credo: What we believe.
The core principles that guide our investing.
Learning from the research
We’re a father and son who have invested through booms and busts, trends and crashes. We started out trusting our money to others, only to learn that advisors don’t always have our interests at heart. We appreciated the value of index funds but were disappointed with the exposure to downturns. Eventually, Don developed a simple trend-following trading system, grounded in research and data, which Devon automated. (You can learn more about who we are here.)
We practice evidence-based investing. The below set of principles are derived from some of the most significant research on trading and markets from the last 50 years. Like any hypotheses, the statements below are open to disproof — but any new idea has to earn its way in.
01. Markets are efficient.
The price already contains everything public1. We don’t chase news, tips, earnings calls, or forecasts; that information is priced in before we could ever act on it. The price is our signal.
02. Simple beats clever.
A handful of deterministic rules beat a black box with fifty dials. Every extra knob is one more way to fool yourself in a backtest23. We keep it boring on purpose.
03. Index funds beat stock pickers.
Over every time frame that matters, low-cost index funds beat the vast majority of active managers.45 We don’t pay someone to be the rare exception, and we don’t bet on ourselves to pick winners either.
04. Day-trading is for pros only.
The high-frequency algorithmic traders will always win that fight,67 and we have better things to do with our lives. So we back-tested daily, weekly, and monthly trades, with and without various triggers. The simplest — monthly trades — won hands-down (see #2). So that’s what we do.
05. Momentum is the exploitable edge.
It’s the most significant and consistent gap in an efficient market, and it has held up for two centuries across markets, asset classes, countries, and cycles.8910 It’s human nature: always and everywhere, people pile into what’s working and bail on what isn’t. The trend is your friend.
06. Allocation drives returns.
Where your money sits matters far more than which fund you pick1112; it drives most of your long-run outcome. So we point momentum (#5) straight at allocation: hold what’s rising, rotate out of what’s falling.
07. We survive crashes; we don’t predict them.
Nobody times the top. But a trend rule walks itself out of a crash1314 and into cash, bonds, or whatever’s still working. We’ll be late to a one-day crash, but those aren’t what ruin you. The slow bear markets are the bigger risk, and those we handle well.
08. Zero commissions and tax-advantaged accounts make this possible.
A monthly, do-it-yourself rotation across dozens of funds only works when trading is free and the gains are sheltered. A decade ago the commission drag alone would have sunk it; today, inside an IRA or Roth, it’s more workable than ever.
The Payoff: More money for less pain.
By pointing momentum at allocation across index funds with zero-commission trades, we beat buy-and-hold on return and fall a lot less when markets break. Better returns with less risk. That’s the payoff.
Our Promise: Honesty and transparency.
We test as realistically as we can, and we show our work. We correct for survivorship bias; we include conservative trade costs; we pressure-test against every crisis and downturn in our data. You can inspect the complete history of each model on this site — the good months and the bad. But even the most carefully constructed backtest is a hypothesis, not proof; it can’t compare to a record of real trades. Don has been running successive versions of this strategy for years in his own accounts. What’s new is that we publish cryptographically-signed trade reports — a public, tamper-evident record you can verify — so the live track is as open as the backtests. We’re adding to that record one month at a time.