This post summarizes my understanding of the principal investment strategy on building a core equity position for long-term capital appreciation. In the future, I will write more details about the systematic implementations and document relevant research.

Investment Objective: Long-term capital appreciation

Investment Vehicle: Equity Portfolio (Long Only)

I believe a systematic implementation in seeking high-quality companies will reward investors in the long-term. Start with a bottom-up approach, my goal is to build an all-season equity portfolio with strong and consistent alpha generation against the broad market index, except for recovery stage of the market when all the “value” (junk) stocks tend to outperform. With the top down analysis, I seek better performance with active asset allocation decision (applying leverage or asset rotation).

Bottom-up approach:

The bottom-up security selection process is the foundation of building the core equity portfolio. In order to build a core position, we need to identify high-quality names regardless of the business conditions. The following measurements either in qualitative or quantitative are the keys in my security selection process.

Qualitative Summary:

• Strong or fast-growing brand recognition
• Sustainable competitive advantage
• Healthy financial condition
• Responsible corporate governance

Quantitative Measurement:

• Strong current profitability
  • Cash flow return on investment and trend
• Sustainable profitability that persists into the future
  • Earnings with low accruals
  • Earnings Variability
• Moderate comparable valuation metrics
  • EBITDA/Enterprise Value
  • Free cash flow yields
• Solid balance sheet
  • Net Debt/Total Assets
  • Cash Interests/Cash
  • Shareholder’s Equity
• Healthy revenue generation
  • Revenue Growth
• Avoid extreme moments on stock return
  • Momentum
  • Volatility (Covariance, beta)
  • Skewness (Coskewness)
  • Kurtosis
• Avoid Long-lasting Negative Investor Sentiment
  • Stock News Sentiment

Top-down approach:

While bottom-up security analysis is the foundation of my investment process, the economic condition is the foundation of market return in the long run (normally the economics indicator is lagging, however, as my mentor Mr. Ted Theodore said: Not every bear market comes with recession, but every bear market comes with a bear market). Furthermore, active asset allocation decision in country and sector can be better achieved with top-down analysis.

• Economics Forecasts
• Leading Economics Indicator Analysis
• Credit Analysis
• Foreign Exchange Rate
• Industry Growth Prospects
• Equity Fund Flow

建立核心股权投资组合

这篇文章总结了我对建立长期资本增值核心股权的主要投资策略的理解。将来，我将编写更多关于系统实现的细节并记录相关研究。

投资目标：长期资本增值

投资工具：股票投资组合（多头）

我相信一个以寻求高质量公司为目标的交易系统方面将奖励长线投资者。从自下而上的方法开始，我的目标是建立一个与广泛的市场指数相比具有强大且持续的超额回报的全季度股票投资组合，除了在市场的所有“价值”（垃圾）股票复苏阶段以外都跑赢大市。通过自上而下的分析，我通过积极的资产配置决策（应用杠杆或资产轮换）寻求更好的绩效。

自下而上的方法：

自下而上的安全选择流程是构建核心股权投资组合的基础。为了建立核心地位，无论业务条件如何，我们都需要识别高质量的名称。定性或定量的以下测量是我的安全选择过程中的关键。

定性总结：

• 强大或快速增长的品牌认知度
• 可持续的竞争优势
• 健康的财务状况
• 负责任的公司治理

定量测量：

• 强劲的当前盈利能力
  • 现金流量投资回报和趋势
• 持续存在于未来的可持续盈利能力
  • 低应计利润
  • 盈利可变性
• 适度的可比估值指标
  • EBITDA / 企业价值
  • 自由现金流收益率
• 稳固的资产负债表
  • 净债务/总资产
  • 现金利息/现金
  • 股东权益
• 健康的创收
  • 收入增长
• 避免股票收益的极端矩
  • 动量
  • 波动率（协方差，beta）
  • 偏斜（歪斜）
  • 峰度
• 避免持久的负面投资者情绪
  • 股票新闻情绪

自上而下的方法：

虽然自下而上的安全分析是我投资过程的基础，但从长远来看，经济状况是市场回报的基础（正常情况下，经济指标滞后，因为我的导师Ted Theodore先生说：并非每个熊市都发生于经济衰退期，但每个经济衰退期都伴随着熊市。此外，通过自上而下的分析，可以更好地实现国家和行业的积极资产配置决策。

• 经济预测
• 领先的经济指标分析
• 信用分析
• 汇率分析
• 行业增长前景
• 股权基金流动