How We Build Portfolios
Decades of research, distilled into original model portfolios. We study what the world's best stock pickers actually buy, layer in our own analysis, and add active risk management on top. Here's how it works.
The Philosophy
Money flows where it's treated best.That principle is the foundation of how we build portfolios. Pure fundamentals research isn't enough on its own. You can find a great company, build conviction, invest, and watch it sit dead for a year because no institutional flow is hitting it. The thesis was right; the math was right; the wave never came.
The unlock is combining fundamentals research with watching where institutional money is actually moving. The world's best investors disclose their holdings every quarter via 13F filings. When the company we like on fundamentals is also being accumulated by managers we respect, that's the wave forming. We paddle in front of it.
Investing is surfing.
You don't fight the ocean. You watch the horizon, spot a wave forming, paddle into position, and ride the energy to shore. Stock investing works the same way. Find a good company. Spot the institutional buying. Get in front of it. Ride it. Stay disciplined.
And here's the part nobody talks about:individual investors have a structural advantage over the pros at exactly this game. A pension fund deploying $5B can't enter a position in a day — they have to build it over weeks while the price drifts up. An individual buying $5,000 of the same name can be fully invested in five minutes. By the time the institution finishes, you're already holding. That's the wave we're catching.
The Approach
Follow the Smart Money
The best stock pickers in the world spend millions on research before making a single trade. Their highest-conviction positions (the stocks they're putting real money behind) tell you more than any analyst report or cable news segment ever will. We track what they actually buy, not what they say.
Public Data, Rigorous Research
Everything we do is grounded in publicly available filings. No insider information, no black boxes. Just thorough, disciplined analysis of data that's available to anyone. But most people don't have the time or tools to study properly.
Rules Over Gut Feelings
Every portfolio follows clear, pre-defined rules. We don't make emotional trades or chase headlines. When multiple top stock pickers agree on the same name, that's a signal worth paying attention to. We build portfolios around those conviction signals.
The Process
Research
We start with over 3,000 stocks and study what the best investors in the world are buying. Not just what they own. Where they're adding, where they're cutting, and where conviction is highest.
Filter
Most stocks don't make the cut. We narrow thousands down to a few dozen names where the best stock pickers show genuine agreement. When multiple legendary investors are buying the same stock, that's worth paying attention to.
Build
We construct equal-weighted portfolios from our top picks. Simple, clean, and easy to replicate in any brokerage account. No complicated position sizing or exotic instruments.
Monitor
We continuously track how the best investors are adjusting their positions. If conviction shifts, we want to know about it before the next rebalance.
Rebalance
Every quarter, we update the portfolios based on the latest data. We use a sell buffer to avoid unnecessary turnover. We only make changes when they matter.
Our Portfolios
No single portfolio fits every investor. Just like no single pair of shoes fits every occasion. We build different portfolios for different goals.
Core 20
Flagship
Our flagship portfolio and the one we'd recommend if you could only pick one. Twenty well-researched stocks built to deliver strong returns with a smoother ride. Lower drawdowns and less volatility make this ideal for investors who want to sleep at night.
Market Masters
Aggressive Growth
High-conviction picks from the best-performing stock pickers in the world. Higher expected returns, but a bumpier ride. Built for growth-oriented investors who can handle more volatility and have a longer time horizon.
Tepper Tactical
Enhanced Manager Strategy
Built around the holdings of one of the most legendary investors alive, enhanced with tactical risk management to smooth the ride. Maximum upside potential for investors who want concentrated exposure to a proven guru's best ideas.
Backtesting & Validation
Tested Through Real Market Cycles
We don't just backtest over the good years. Our portfolios are validated across decades of real market history. Including the 2008 financial crisis, the 2020 pandemic crash, rising-rate environments, and the 2022 bear market. If a strategy can't survive the bad times, it's not worth following in the good times.
Honest Numbers
We show you the drawdowns, not just the returns. Every portfolio page includes max drawdown, beta, and risk-adjusted metrics like Sharpe and Sortino ratios. You deserve to see the full picture before putting real money to work.
Realistic Assumptions
Our backtests account for transaction costs and the realities of rebalancing. We don't assume perfect execution or zero friction. The numbers you see are as close to what you'd actually experience as we can make them.
What We Don't Do
No Market Timing
We don't try to predict where the market is headed next week. We stay invested and rebalance with discipline.
No Leverage
Our portfolios are 100% stocks. No margin, no shorts, no complex derivatives. Just straightforward ownership.
No Options
We stick to buying and holding good stocks. No hedging overlays, no options strategies, no unnecessary complexity.
No Day Trading
Quarterly rebalances keep trading minimal and tax-efficient. We're building long-term wealth, not chasing daily moves.
The Sell Buffer
Not every small ranking change means we should sell. If a stock drops a few spots in our research but hasn't fundamentally changed, we hold it. This "sell buffer" prevents us from churning the portfolio over minor noise.
The result: lower transaction costs, less tax drag, and a more stable portfolio. We only sell when conviction truly drops. Not when a stock moves from position #12 to position #14 on our list.
Quarterly Rebalancing
All portfolios rebalance every quarter. This keeps them in sync with the latest research and gives you a steady, predictable schedule for adjusting your own holdings. No surprises, no frantic emails. Just a clear plan four times a year.
Active Risk Management
Most managers, even legendary ones, don't apply real risk management at the portfolio level. They pick stocks they believe in and let the chips fall.
We do something different. On top of the fundamentals + flow research, every portfolio gets an active risk-management overlay:
- Drawdown discipline. Position sizing and rebalance bands tuned to control how much we can lose in a bad scenario.
- Sector limits. No matter how much we like a sector, we cap concentration so a single sector rolling over can't take down the whole portfolio.
- Quality filters. Even if a name is showing up across a dozen high-quality 13Fs, if its fundamentals don't pass our quality bar, it doesn't make the portfolio.
- Rebalance bands. We don't reflexively trim winners or buy dips. We only act when drift crosses a threshold or the underlying thesis changes.
The result is portfolios that capture more of the upside in good years and lose less in bad years. The combination is what compounds into long-run outperformance.
An Honest Word on Year-to-Year Results
The portfolios significantly outperform their benchmarks over the long run. They also lose to the benchmark in roughly 4 out of every 10 calendar years.
Both are true at the same time. The reason: when our portfolios win, the wins tend to be bigger than the losses. Compound that over decades and the math works out to meaningful outperformance, even though one year in three feels like a step backwards.
We tell members this in the open, before they sign up. Promising "we beat the market every year" is a lie that breaks trust the first time it doesn't hold. Telling the truth — that ~60% of years win, the wins are bigger than the losses, and over decades it compounds beautifully — is a far better long-run pitch.
The investors who stay through the lean years are the ones who earn the long-run returns. Process, patience, and patience again.
The Three Decisions That Matter
Most investors obsess over things they can't control: the market, interest rates, the next earnings beat. The variables that actually matter are the three you fully control:
How much you invest
Money has to be in the market to compound. Cash on the sidelines doesn't surf.
Where you put it
This is where we add value. Quality companies, institutional flow, risk-managed portfolios.
How long it stays
Time and compounding are the real magic. The longer the horizon, the more the math works for you.
Get all three right and the odds of a great outcome are very high. The market is going to do what it does. Your behavior on those three variables is the part you actually control.
Why We Share Backtested Performance
Advising Alpha is a publisher, not a Registered Investment Adviser. That distinction matters, and it shapes what we can show you.
Mutual funds and hedge funds publish audited live performance because the regulatory framework requires it. They also charge management fees, demand minimums, and lock up your capital. We do none of that, and we can't legally publish audited live returns the way they do.
Backtested performance is what we can share. It has real limitations: it's hypothetical, it doesn't include transaction costs, and past patterns don't guarantee future results. But within those limits, it's the most rigorous tool available for showing what the methodology behind a portfolio can produce over decades of data.
We treat it as a starting point, not a promise. The numbers are real numbers from real historical data, run against the actual rules each portfolio follows. You're seeing the engine. Whether it produces similar results going forward is up to the markets.
We'd rather show you the engine honestly than dress up the limitations.
Ready to See the Portfolios?
Check out the performance, the charts, and the numbers for yourself.