Before Investing
- To minimize risk NFS forms portfolios only among S&P 500 companies and stays in the long-side of the market. S&P 500 companies’ stocks are low-risk stocks.
- At any given time that we are in the market, NFS invests a minimum of 7-8 different sectors in diversifying any possible sector shock. At the same time for each sector, NFS invests in 6-7 different stocks to reduce any possible stock shock. Therefore, when we are in the market, we hold a diversified portfolio that eliminates sectoral and individual stock risks from the very beginning.
- NFS does not use leverage for portfolios and only buys equal to the total liquid money size that we control. Of course, little leverage can be used to achieve different risk parameters of the portfolio.
Within the Investment Period
When NFS forms the portfolio associates with an SPDF, it starts to create all possible alternative TPDF to compare with our holding SPDF. If NFS detects a stock is deforming our SPDF, and there is a better alternative stock to substitute, NFS sells the stock and replace it with the better one and jumps from SPDF1 to SPDF2.
From the beginning of the investment to the end, NFS compares holding portfolios to alternative portfolios consistently. Therefore, risk management is the core of our investment. And it is clear that this risk management process is far beyond human abilities, very disciplined, and based on statistics, unemotional, and systematic.