Inside today’s Daily Journal…

Editor’s note: Porter has turned today’s Journal over to Emmet Savage of MyWallSt. This week, Emmet and his team at MyWallSt are rebalancing the holdings inside Prophet – the rules-based investing system designed to identify companies with both improving business momentum and improving share-price momentum.

This is an important moment… particularly for readers who have been following Emmet since Porter traveled to Ireland this spring to learn more about his system. You see, Prophet is not built around forecasts, opinions, hunches, or market commentary…

It is built around discipline.

Here’s Emmet with the details…

One of the hardest lessons I’ve learned in nearly 30 years of investing is that good investing often feels wrong in the moment.

Buying when the market is ugly feels wrong.

Holding through a 40% drawdown feels wrong.

Selling a company you like because the evidence has weakened feels wrong.

And buying a company you don’t yet feel emotionally attached to – simply because the data has improved – can feel wrong too.

But that is exactly why having a system matters.

This week, we are carrying out a new rebalance inside our service, Prophet. That means the system has done what it is designed to do: review the portfolio, reassess the evidence, and decide whether the 10 companies currently held still deserve their place.

Not because I woke up with a feeling.

Not because of a headline.

Not because of a prediction about interest rates, elections, inflation, oil, or the Federal Reserve.

Because the rules say it is time to look again.

That may sound simple. But in my experience, simple is rarely easy.

Most investors do not lose because they lack intelligence… They lose because they lack a process.

A system removes as much of that emotional interference as possible.

And that is the entire point of what we are doing with Prophet.

Every stock in a portfolio is competing for capital.

A company does not deserve a place in a portfolio forever because we once liked it. It deserves a place because the evidence still supports owning it today.

In Prophet, we are looking for a specific combination: improving business momentum and improving share-price momentum.

We want companies where the business is getting stronger and the market is beginning to recognize it.

That overlap matters.

A wonderful company with weakening numbers may still be wonderful, but it may no longer be the best place for fresh capital. A stock moving sharply higher without business strength underneath it may be momentum, but not the kind we want to own.

The rebalance asks one clear question:

Do we still own the 10 strongest candidates according to the system?

If the answer is yes, we hold.

If the answer is no, we make a change.

There is no drama in that. It is simply the process working.

One of the most common mistakes investors make is treating a portfolio like a museum.

They collect stocks. They remember why they bought them. They become attached to the original story. And over time, the portfolio becomes a record of past decisions rather than a reflection of current opportunity.

A portfolio should not be a museum. It should be a competitive team where every company has to keep earning its place.

You can see this clearly in how Prophet has behaved. Howmet Aerospace (HWM) has held its place in the portfolio since December 2024 – surviving roughly 18 months of regular reviews – and in that time has compounded into one of the portfolio’s strongest performers. It stayed not because we grew fond of it, but because month after month the evidence kept supporting it. That is patience in action: giving genuine strength the time it needs to reveal itself.

But the same discipline that lets winners run is what removes the names that no longer belong. This March, the system parted with several holdings after only a matter of weeks – not because anything dramatic happened, but because the evidence behind them had faded. Some left at a loss. None left because of a headline. They left because they were no longer the strongest candidates for our capital, and holding them out of loyalty would have been exactly the museum mistake.

That does not mean trading constantly. Quite the opposite. The biggest money is made by giving great companies the time to compound, and some of my best investments have required years of patience before the market truly understood what was happening.

But patience and passivity are not the same thing.

Patience means allowing a strong thesis time to play out.

Passivity means refusing to change your mind when the facts have changed.

A good system helps separate the two.

When people first look at Prophet, they naturally focus on the 10 stocks. Everyone wants the names. But the real value is the process that creates the list, reviews it, and updates it.

Here is a small example that captures why. Medpace (MEDP) was a holding for a long stretch, then the evidence weakened and the system sold it. Some time later, the data improved again – and the system bought it straight back. No grudge. No memory of the earlier exit. No story about being “burned.” Just a fresh look at the evidence and a clean decision. A human investor would often struggle to repurchase a name they had recently sold. The rules had no such difficulty.

That is the point. A list can go stale. A system can adapt.

Markets are not fixed. Business momentum changes. Competitive advantages widen and narrow. New winners emerge. Old winners fade.

The danger for investors is that they often react to price but ignore evidence. They sell too quickly when the price moves against them. Then they hold too long when the original evidence has disappeared.

A system is designed to reverse that. It gives us a defined moment to review, a defined set of evidence to examine, and a defined reason to act – or not act.

No investing system is right every time. But a good one gives us a better way to behave. And in investing, behavior is everything.

This week’s rebalance is not a prediction about what the market will do tomorrow.

It is not a claim that every new addition will rise immediately.

It is not a guarantee that every company leaving the portfolio will fall.

It is a disciplined update. Based on the evidence available today, the system is telling us where it believes our capital is best placed.

Some months, that will confirm what we already own – the way it has kept faith with Howmet through a long, patient climb. Other months, it will force uncomfortable changes – the way it cut loose names this spring that simply weren’t carrying their weight. But comfort is not the goal. The goal is to keep capital moving toward strength.

It does not ask us to predict every headline, every decision by the Federal Reserve, every election, or every market scare. It asks us to follow the evidence, month after month, with discipline.

There is no shouting. No panic. No grand forecast.

But in my experience, this is how serious wealth is built.

Not by reacting more.

By deciding better.

Emmet Savage
MyWallSt

To learn about Porter’s trip to Ireland and conversation with Emmet about his MyWallSt service Prophet, click here now.

Keep in mind, we at Porter & Co. only publish guest essays from publishers we know to offer well-researched ideas vetted by a legal team, excellent customer service, and reasonable refund policies. MyWallSt is one such partner. We do not, however, under any circumstances, make any representations about their investment ideas or strategies, nor will we warrant them as equal to our own. We do recognize that the markets are tempestuous and, at times, ideas that we may not endorse prove valuable.

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