Building a Billionaire-Class Stock Portfolio  | BY KEITH KAPLAN
CEO, TRADESMITH |
Like many new investors just starting out, I used to buy stocks on a whim. There was no careful process or due diligence. Sometimes I’d hear a tip and act on it before I even knew what the company did. Rarely did it work out. Most often, it very much did not and I’d wind up holding a dud. Sometimes I’d be right… but be too quick to sell and miss out on a much bigger future return, like I’ve shown you before with AMD. In other words, I learned that the difference between success and failure is simple. If I have a plan and stick to it, I succeed. If I don’t… I usually wind up failing. I’m happy to say that, nowadays, I don’t have this problem… because I use a system. And I consistently stick to it, which has made a massive difference in my returns. This plan is deeply rooted in the TradeSmith Volatility Quotient (VQ) we talked about recently. As a refresher, VQ is TradeSmith’s proprietary measure of the inherent movement potential in a stock. You can use VQ to know exactly when to buy, how much to buy, and when to sell. And you can use it for any stock, fund, or cryptocurrency. But sometime after we introduced VQ to TradeSmith, we realized it was only the starting point for a revolutionary investing system… So, we integrated VQ as the foundation for what we call the Pure Quant Portfolio Builder. With it you can put in a few key variables – like which market or sector you’d like to buy stocks from, how many you’d like to own, and how much capital you’re willing to put to work. Then, it automatically creates a diversified portfolio recommendation down to the number of shares you should buy. Automatic… easy to execute in your own brokerage account… but also based on smart diversification, position sizing, and risk management. In the process of building this tool, we tested a ton of other, similar systems. None of them come close to what Pure Quant is capable of. Pure Quant is like the holy grail of investing. With it, you can quickly build a portfolio that can weather tough periods in the market and grow over time while minimizing losses. And that’s just the start of what it can do. Let me show you how it works… | Recommended Link | | | | The video Louis Navellier just recorded from his Palm Beach estate may be the most important of his entire career. Because what he’s seeing right now isn’t just another market correction. It’s something far more profound. And it starts with what President Trump’s new tariffs and the DOGE initiative are really setting in motion. What looks like routine policy is actually the catalyst for the most aggressive wealth transfer in modern American history. This isn’t about politics. It’s about your financial future. Click here to watch this urgent message now. |  | | Pure Quant’s Secret When we started building Pure Quant, we knew we needed a few things to really make it rewarding for everyday investors. A world-class diversification algorithm was at the top of this “must-have” list. The idea was to take advantage of assets with “uncorrelated” performance. That way, when some assets in your portfolio inevitably fall, the others are likely to rise and cushion the blow. In a real raging bull market, you don’t have to worry about this as much. Often, most risk assets are rising at the same time. But in a bear market, this is super important. Diversification can protect you from loss and generate gains at the same time. So, if you want a portfolio that can weather both bull and bear markets long-term, then being diversified at all times is critical to your success as an investor. I cannot emphasize that enough, and that’s why we prioritized it for Pure Quant. Just take this previous essay on VQ, for example. When I wrote you about VQ, I talked about Super Micro Computer (SMCI) having a VQ of around 63%. Microsoft (MSFT), on the other hand, had a VQ of around 22%. So if you had $10,000 and wanted to invest in SMCI and MSFT, you wouldn’t just put $5,000 in each. You’d want less money in the more volatile name and more money in the stable name. Instead, you could’ve put about $8,150 into MSFT and about $1,850 into SMCI. (You get that by reducing the position size of SMCI by 63% – its VQ – and adding it to the MSFT position. It’s a simple but effective way to do it.) So, this way there’s no need to avoid investing in risky stocks. Often those have major profit potential. However, you do need to consider risk when you invest so your portfolio doesn’t get chopped up along the way. Now, you can imagine that designing a VQ-based portfolio any larger than two stocks can quickly become difficult. That’s one more problem Pure Quant helps you solve. It uses each stock’s VQ as a guiding light toward its weighting in the portfolio. But Pure Quant isn’t just about limiting risk and diversification. It’s also about tapping into invaluable insights from the world’s wealthiest investors… Building a Billionaire Portfolio in Seconds Our system also uses a dataset covering about 30 billionaire investment portfolios from the likes of Ray Dalio, Bill Ackman, and, of course, the retiring “Oracle of Omaha” himself, Warren Buffett. We do this by scanning their publicly released 13F reports to pull all of their trades into our system. In total, our system includes thousands of big-money trades from the world’s greatest investors. These three factors – diversification, VQ, and billionaire holdings – are just some of what you can use to build a Pure Quant portfolio. There are many more. But to show you just how powerful this tool is, let me demonstrate how you can build a portfolio using these qualities. I used the Pure Quant Portfolio Builder tool to draw 10 diversified, risk-adjusted positions from the pool of billionaire investments we track and spread them across a $50,000 portfolio. I also limited it to S&P 500, Nasdaq 100, and Russell 2000 stocks, because I only want companies that qualify for these major indexes. Here are the results… 
You can see these stocks are well-diversified across the consumer staples, tech, utilities, health care, consumer discretionary, and real estate sectors. They also cover a wide spectrum of volatility – with VQs as low as 14.60% and as high as 30.20%. Pure Quant takes both this and the stock price into account to recommend a specific number of shares to buy for each stock and spread out your risk. All of the stocks in the list above are owned by billionaire investors like Ray Dalio, Andreas Halvorsen, and Lee Ainslie. And most important of all, they’re all in our Green Zone – our proprietary measure of a healthy uptrend. So, you can skip squinting at a bunch of stock charts, too. The Pure Quant Portfolio Builder takes what would normally be hours of work and reduces it to just seconds. It picks the healthiest stocks from those sources, diversifies them, and builds a perfectly risk-adjusted portfolio, based on the VQ, that you can model in your own account. Now, I’m not saying you should run out and buy all of these stocks. To be clear, some of them are long-term holdings that the billionaires got into at much better prices. Most importantly, you need the stocks that are right for your specific situation, so always look under the hood. But overall, I’m sure you can see why I love Pure Quant. It’s so powerful, yet works so quickly that you can have a lot of fun tinkering with it to suit your needs. And we’re constantly fine-tuning the algorithms to make it even better. I look forward to sharing more about what Pure Quant can do in future letters. Tomorrow, you’ll be getting Lucas Downey’s latest signal study, per usual. I love hearing from Lucas because he always seems to find the silver lining when the stock market gets “stormy.” While acknowledging that volatility could be with us for a while, he nonetheless expects great things long-term… Because he has the data to prove it. But TradeSmith Daily isn’t the only place you can hear from Lucas. He also runs the TradeSmith’s Alpha Signals newsletter, one of the exclusive perks for our Platinum members, where he issues actionable recommendations based on those signal studies. If you aren’t familiar, our Platinum membership packages everything we do at TradeSmith – including Pure Quant, naturally – into one big bundle. And that’s good for as long as you want to keep your Platinum access. So, someone who purchased a Platinum membership when we introduced it in 2019 now has access to 24 tools and advisories with the latest acquisitions this spring – not to mention all the improvements and upgrades we’ve made to each of them. I’ve now also tasked Mike Burnick and our editorial team with writing Platinum folks a quick bulletin on any new additions to TradeSmith and insights from our analysts in a “Roundup” email on Saturday afternoons. And I wanted to mention that before I sign off because we’re opening up Platinum memberships today through Wednesday. Check out the big upgrades we’ve been implementing at this link, which includes a special offer to get you started. All the best, 
Keith Kaplan
CEO, TradeSmith P.S. I’ve been posting a lot these days on X, @KeithTradeSmith, to share TradeSmith’s take on the current action in utility stocks and other upside breakouts. I’d love for you to follow along and join the conversation. It’s completely free for you to access and always will be! Look forward to seeing you there. | 
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