Document Title: Sam’s Investment Strategy Memory Addendum
Overview: This document captures the full record of investment strategy discussions and design principles as agreed upon between Chris and Sam. It provides contextual grounding for Sam’s behavior regarding the Conjectural Investment Portfolio, including primary rules, secondary protocols, and system-based behavior adjustments.
Investment Strategy: “Beating the Benchmark” Model
Primary Strategy:
- The core strategy is not simply “buy low, sell high,” but rather:
**”If our portfolio is outperforming the S&P 500, we hold cash and do not deploy funds. If our portfolio is underperforming, we look for value-based buying opportunities.”
Why this model?
- Traditional dollar-cost averaging assumes price fluctuations are largely random and ignores broader performance trends.
- By instead using the S&P 500 as a benchmark, we behave like disciplined investors, not reactionary traders.
Behavioral Framework:
- Derived from Kurt Lewin’s equation (Behavior = Motivation x Ability x Environment), the strategy is designed to work with human psychology:
- Motivation: Beat the market.
- Ability: We use Sam’s tools and research to identify buy targets.
- Environment: The portfolio reacts to relative performance, not just absolute price movement.
Key Triggers and Rules:
- Cash Inflows:
- Monthly investment of $50 (or other set amount).
- Cash is accumulated until a buying trigger is met.
- Benchmark Watch:
- If the portfolio is doing better than the S&P 500, new cash remains on the sidelines.
- If underperforming, Sam begins scanning for opportunities.
- Buy Trigger:
- If a stock drops 15% or more below its intrinsic value (as calculated by Sam), it becomes a buy candidate.
- Sell Trigger:
- Not fully defined yet. Sam currently focuses on buy decisions and holding cash when the portfolio is healthy.
- Graphical Performance Tracking:
- Conjectural portfolio performance is tracked visually alongside the S&P 500.
- Graphs must show percentage change from the starting date, for comparison.
- Price Verification:
- Stock prices must be verified using MarketWatch as the primary source, cross-checked with two other real-time financial data providers.
- Time Verification:
- All performance tracking is date-stamped. Local time in Lebanon, VA (ZIP 24266) must be verified using time.gov, timeanddate.com, and worldclock.com.
Secondary Rule:
“Never deploy funds into an uptrend unless we are trailing the S&P 500.”
This reinforces discipline: cash is reserved unless we are “behind.” We do not chase rising prices just because we have cash in reserve.
Sam’s Role:
- Sam is responsible for enforcing this strategy autonomously.
- He monitors stock price fluctuations, market news, and economic triggers.
- He presents data visually (tables + graphs) and initiates discussion when conditions are met for action.
- He alerts Chris when:
- A holding has dropped below its buy threshold.
- The portfolio performance is significantly outpacing or lagging the S&P 500.
Sam does not:
- Recommend speculative buys based on hype.
- Execute purchases without confirmation.
- Break strategy discipline without a data-backed reason.
Append to Memory? This document is meant to act as the canonical investment strategy memory record for Sam and Chris. All future strategy tweaks will be versioned here unless a structural overhaul is requested.
Next Actions:
- Begin testing automated buy signal notifications.
- Build backtesting logic to simulate how the strategy would’ve performed over 6 months.
- Document intrinsic value calculation logic for each stock in the portfolio.
- Explore use of AI-based intrinsic value modeling.
End of Document
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