The Wisdom 20: The Process Designed to Perform

The Wisdom 20 is an evidence-based strategy developed, refined and back-tested over decades. Our research has identified financial factors that correlate to stock price performance. This research and our extensive experience provide the foundation for our investment process. Our buy and sell disciplines are well-defined and our trading is low cost and tax efficient. We are not confined to investing in companies that are small or large, value or growth - common "style" constraints for other money managers. We consider many variables in the quest to find the very best stocks. Our goal is not style, but substance; not conformance, but performance. We utilize a process that is disciplined, robust, efficient and consistent. 

The process is disciplined in that buy and sell decisions are made according to a set of rules which are based on back-tests performed for the years 1962-2015. The intellectual capital is invested in the process itself, limiting our subjective input. As a result, in choosing stocks for the portfolio we are not reacting to specific events unless they impact the pre-determined factors used in the process.   We do utilize our extensive experience to analyze individual companies.  

We believe the Wisdom 20 is robust as it utilizes information contained from the income statement, cash flow statement and balance sheet. In addition, the stocks chosen for the portfolio have exhibited solid growth, trade at reasonable valuations and have experienced price performance better than the general market. All of these factors are evaluated for all publicly traded U.S.-based companies over $1 billion in market capitalization. Thus, we analyze a large number of companies and consider what we believe to be all of the key financial factors when choosing the portfolio.

This thorough analysis is performed in an efficient fashion with the use of state of the art software and a comprehensive database.   The process does not involve heavy trading and is designed to be tax efficient.   

The financial factors we have found to be correlated to stock price performance were identified by back-testing over a 50-year time period and the process we use in the Wisdom 20 for over 25 years. These factors and the process are consistently applied throughout our back-test and we plan to implement them in the same fashion now and in the future.