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Mathematically Brilliant

Written by:
J.C. Galbrun
A retired mutual fund manager, and GetFolio Subscriber.

Home runs, slam-dunks, go-for-broke downfield passes are the highlight moments in professional sports, but every coach worth his pinch of salt will tell you it is defense that wins championships. Similarly, the investment performance of very successful investment and fund managers like Peter Lynch, George Soros and Bill Gross have been the focus of and gained the raves of journalists and the investment media, but, make no mistake: it’s a defensive diversified portfolio approach – in addition to some strategic sizzle – and, a fully deployed risk management strategy that provide the foundations for their consistent returns and long term performance. 

It’s not that the right decisive stock market or interest calls don’t make money. But that the probability of being right is low, and you can’t count on said predictive calls to work every time, or to add value every quarter or even every year, especially when markets don’t move much. When your offense strategy goes flat, when the long bomb falls incomplete or the slam-dunk incredibly bounces off the rim, then a coach looks to his defense to hold the line. The same applies to investing where portfolio composition, diversification and risk management are of the utmost importance to first protect the equity required to “play and stay in the game”, and second, to guide and maintain the discipline the investing process demands for its return to be consistently successful. 

To continue the sports analogy, skydiving and volleyball involve two different risks. Skydiving risks the entire outcome of the sport on one single trial. Volleyball, in contrast, is a game where the outcome depends on dozens and dozens of individual actions over the entire season. In volleyball, if a particular action does not work, the result is a one-point loss. Even if a great team is unlucky enough to have so many unfortunate individual actions as to affect a particular game, the results at the end of the season will represent the return from hundreds or even thousands of individual risks, none of them, individually, being decisive or catastrophic.  

Investing is the same way. Aggressive investing is a lot like skydiving without strapping on a parachute. If a particular risk does not work out favorably, the result will be painful and catastrophic. On the other hand, Getfolio’s risk-controlled investing is more like volleyball. The idea behind Getfolio is to take lots of actions that are effective on average, without relying on one single play, sector bet or “big idea”, thus building substantial diversification (through risk-defined investment position sizes) and management restrictions in the investing process to reduce the impact of investment positions that turn out to be incorrect. All of these restrictions in position size and management exist because investing involves risk, and risk often reflects what most of us fear: FINANCIAL LOSS. 

Further, financial markets go through conditions that are not always conducive to a favorable risk-reward relationship. Financial markets exhibit oscillatory behavior over time; corrections on Wall Street are far from being rare events. Yet investors – and the financial media - react as if the end of capitalism is truly coming instead of keeping their cool, when in fact, it is a natural phenomenon engineered by institutional investors’ collective actions and portfolio arbitrage.  

This is why we define 'a full market cycle' - on the basis of which Getfolio’s individual recommendations are generated - as a Downmarket followed by an Upmarket. If valuations are favorable and the quality of market action suggests that investors are regaining a strong preference to take risk, a substantial and diversified exposure to market fluctuations will be rewarding. In contrast, when market conditions are overvalued and market action is poor,........................ the performance of Getfolio is built largely around risk management which takes the form of position scaling-in, diversification, position size, reallocation and risk management.  

The 'individual' risk exposures Getfolio recommends to and manages for Subscribers - are the volley shots, rebounds, missed passes and periodic slam dunks any sporting team unpredictably confronts during a season. Since Getfolio is not based on predicting market action or making individual/sector bets but, is recognizing that a diversified exposure to individual, sector and market risk is the only way a return on equity can be generated, its effective stock recommendations, initial position sizing calculations, and individual position Risk Manager (the Position Manager) will not eliminate the occasional losses. Instead, Getfolio tries to make its financial impact small rather than large, so that individual 'investing' actions that are effective on average can gradually produce results that are satisfactory overall and over time.  

To summarize, Getfolio forces Subscribers to focus on the process of investing rather than on predicting its outcome – and rightfully so since the latter depends very much on how the former is conducted. Getfolio, most importantly forces subscribers who still wish to go financial skydiving to strap on a parachute whether they're jumping from a treehouse - when buying low according to the X Score approach and IPS - or from a skyscraper when using the Position Manager.   

When it comes to investing, we are often our own worst enemy. We either gamble with a small amount of money, risking it all on a single bet or a small number of stocks, or we let our environment (media, friends, working peers…) dictate our investing choices, biases and emotions. GetFolio is not a shot that one takes when feeling weak or in need of a boost, it’s an INVESTING PAINKILLER we must take to prevent the financial pain of investing from coming back, and to become a SWAN (Sleep-Well-At-Night) - investor. 

That is why Getfolio recommends that subscribers select carefully the volatility of the recommendations they turn into buys, stick to the recommended Initial Position Size and its management discipline, and diversify as much as possible across sectors and volatility parameters for consistency and risk containment and control, and fully use the Position Manager, the irrefutable adjunct to the Stock selection and Portfolio construction system - the equivalent of a seatbelt one wears while driving, or the smoke detector one installs to protect his family from deadly fires.

I have spent the last 10 years doing intensive research into the market in general and more specifically technical analysis. Of all of the books, magazines, newsletters, web sites I have read, your system is the Cartier Tank replica only one that to me appeared rational and non-emotional (as a scientist I find this very appealing).


As a subscriber I manage approximately $255,000 which includes $165,000 in GetFolio. Yes, I am impressed with GetFolio. It provides a disciplined approach to investing. which I find to be extremely useful. The tools of indexing into a position, using low initial investment size and diversification have made me a smarter and more effective investor. Getfolio makes money management easier and less time consuming by providing buy candidates and sell signals for current holdings. The portfolio summary and detail views are invaluable. GetFolio offers the opportunity to benefit and learn from an experienced pro. I commend you for your time and energy which has been well spent. 

As an institutional investment manager with over $100 million under management, I’m well versed in the concept of intelligent risk management (i.e., “money management” or “portfolio management”). However, I’m always looking to add to my base of knowledge in an effort to become a better investor, and the ideas described on your site have undoubtedly advanced my thinking with regard to the management of risk, which is, after all, the essence of successful investing. If your subscribers can learn to keep their greed and fear in check, they will be well served utilizing your strategy. Keep up the good work.


I just can't believe that no one else is doing what you makes so much sense.  I have subscribed to a lot of investment newsletters.  So many are hung up on Technicals that hardly leave you with a trade to make by the time the light finally turns green.  Others are intensely focused upon ascertaining the intrinsic value of the business, the underlying assumption being that some day the rest of the world will agree and the stock price will follow.  Your system deals with the empirically-proven behavior of beaten-down stocks and has identified the best way of estimating the inflection points for investment.  I especially like the money-management emphasis.  I feel very comfortable with it.


So far your system has taken the stress out of investing and today has certainly made it profitable!!!  You are someone I trust in the cut-throat world of wall street. 


I have already referred several people to your site, and I know that at least one has become a member.  As you know I have recently renewed my membership, and plan to continue to renew.  I have been using the strategy for about 13 months and have had a 35% return in that timeframe.  I think that is a very good return considering the huge drops in the market indices.  It was also my "learning curve" year.  I learned some great lessons on position size and have also learned to be much more patient which has really helped in the last several months.  My returns are getting much better the last few months with the smaller position sizes and patience.

Best Regards,

I was just trying to describe how your method makes me feel and those lines came out. It is great to feel in control of the stocks instead of at their mercy, which is how I 've felt in the past. The plain truth is, when we buy a stock, no one on this planet can predict with certainty if it's going up, down, or sideways. Although you are great at picking the bottom ( and I'd love to know more about how), you are smart enough to plan very well for when you are wrong.

I really love the method. It fits so well with my basic instincts about stocks. It is so logical and seems so simple, yet all these legions of experts could not come up with it. You did, and it must feel great. Actually, most of the experts preach against your type of approach:

Anyway, thanks so much for sharing this method. I feel like I've discovered a gold mine. I am now going to gradually move my entire 401k into this account because I feel it's not only the best place for growth, but also the safest place I could put it, (other than a money market account). 

Thanks again,

I have to tell you I am having a blast managing my portfolio with your method. I congratulate you for what you have created, for it is quite an accomplishment. I didn't expect to be writing you this soon with my results, but things have been so good I can't resist. I've been a subscriber just less than two months and I have bought 32 of your picks.  29 stocks are up an average of 28% and the other three are down an average of 10%, for an overall average gain of 24% in less than two months! Moti, I could not be more pleased. Those of us that have been trading stocks for a while know that this is almost a miracle. I am up over 40% on several stocks. On BBY I am up 85%. on JBL I am up 95%! In less than two months!

I realize that I came into this at a great time when many wonderful growth stocks were beaten down, and I don't expect it to be this good all the time. However, I have seen your method in action long enough to understand how it can consistently beat the market by a wide margin. The method really is ingenious. First you are very good at picking the bottom, which is extremely difficult. Then when you miss the bottom your indexing method corrects it and still puts you in at the bottom or very close to it. It makes me feel so in control, like I am manhandling these stocks so no matter which way they turn I've got them by the throat.

To me the most surprising aspect is selling out of the weak lots, and sometimes reducing your position at average cost. I questioned that at first but now I see the beauty of it. The goal is to have no more than 1 to 3% of your money in as many stocks as possible at the lowest price possible. All this maneuvering inexorably accomplishes that. Anyway, Thanks so much for this method. I think I may be retiring much sooner than I had planned....... Thanks,

As far as the strategy, I love it.

I am in the transportation business and we purchase millions of gallons of fuel a year. we met a gentleman (we call him the wizard) who taught us how to hedge fuel properly. such strategies as far as when to start to layer on fuel contracts, how much to do on the front end the layer on more as the cost of heat / crude go down, till it reaches a certain level and you "fill the boat"

I always wondered when someone would have the time and brains to come up with a model to apply this same type of behavior. I've worked with brokerages and it is all flavor of the day, tried it on my own however I get personally attached and know when to buy right but not when to sell.

The discipline you bring and the model you have created is exactly what I am looking for. reading through the tutorials was so uplifting I must have studied them for 3 hours reading back and forth through them.

I think your system has the greatest profit potential per unit of risk I've come across (sound sleep is important after all, right?)! And as good a profit/risk ratio as possible is what investing is all about for me. Buying low, selling high has always been the thing to do, but in practice it somehow seldom came true  - this really does feel right, even though it is contrarian at the moment, but indexing small amounts makes it easy to execute and brings your average buying price near to the bottom. You really have some system!


Just wanted to let you know that I appreciate your hard work and your constant efforts to improve the system.  These last six months have been the acid-test for the GetFolio strategy (and for ANY strategy, for that matter), and I think GetFolio has weathered the downturn quite well. I am very optimistic that your strategy is well-positioned for bull, bear, and "sideways" markets. Thanks much for the portfolio tool. I encourage you to continue to develop it. For me, an automated tracking tool is key to managing 50+ stocks. Keep up the good work.


The best stand alone (dare I say the only stand alone) financial product on the web. 


I decided to try Getfolio at the end of January.  Just wanted to let you know that after just over a month, I have profits 5 times the 1 year subscription price. The new portfolio management is a great improvement.


I manage more than 100K and thanks to you I have been able to keep it that way, even with this tremendous downturn!!!!!!!!!!!  My friend who had the same amount as me invested is down 80%. But he was to busy to try your system. Well the upside for him now is with only 20% of his money left, it takes much less time to watch over. 


We are going through the roughest market in history, and I am still beating the market. Thank you for providing this valuable service. Be well.


Brilliant Moti, Brilliant!!!!!!!!!!


I'm extremely impressed with the program thus far and I hope it continues to work as well. Hard to believe the S&P is down over 30%, and the NASDAQ is down 70%, yet I am up.  I don't know how you do it, but thanks. 


I just wanted to issue a resounding AMEN to Rich's post!  I am learning how to do something that was completely foreign to me pre-GetFolio. I started with a very small amount of funds just to prove the system to myself without risking too much. I am one of those who learns more by doing than by reading, especially if money is involved. The improvements to the site have been extraordinary........the most helpful to me have been; of course the was like a light bulb went really started coming together for me then. You have stressed how important reading the tutorials over and over are. That is one "bit" of advice I wish I had heeded sooner. Thank you so much for the terrific work! Please keep it up! 

Just a note to let you know that I stayed the course and kept the faith and GetFolio paid off. I have followed your system and my  portfolio is up 12.8%, while the S&P is down sharply. Thank you for all that you have taught me. I hope you'll find a way for the dialogue to continue. I look forward to a long association


I just wanted to thank you for all the effort you have put into the site over the past year.  Things just keep getting better.  Keep up the great work and count me in for renewed subscriptions!


I went with you and have been thrilled.  Now that we've had an upswing, I've watched the system in action.  November was tough and I got fully invested quickly in my first month.  Now that December and January have happened, I've seen some nice profits.  I'm a believer.  And THANK YOU for all you've done.  I'm a customer for life!!  


I may not be able to determine an accurate ROI since I become a GetFolio member a year ago, because of overlapping bad stock picks of my own and adding capital to my account the more I appreciated my GetFolio success. Conservatively that number is greater than 75%  Yes, I did use short term selling when stocks recovered with 30% gains in the beginning because I had losses from my pre-GetFolio days to offset and I have used margin. Now that all my tax losses are offset with GetFolio short term gains, just about all my gains are unrealized, untaxed and waiting for long term capital gains tax rates and better opportunities before being sold. But perchance, if the market rallies just a little bit further, I will have sold off all of my weaker lots and be margin free. In that case, when the market becomes negative again, and it will, I will have reserves to buy the next wave of GetFolio stocks without sharing the profits with the tax man. I may not approach the same pre-tax rate of return next year with my longer term approach to investing, but I know that the returns will continue to be incredible, I will keep most of them and I will be willing to settle for 50% per year returns!


After tracking your system on paper for several weeks in later Nov. and early Dec, I have applied it with real purchases since mid December.  As of today, I am up over 27% on the approx. $100K that has actually been invested out of the available pool of $500K.  Needless to say, I am not only happy with the results, but more importantly confident of the overall strength of the system.  Very impressive, Moti.


If you are wondering how your subscribers are doing.  Up 32% since Jan. 2, which makes me a positive 29%, I am sure this number would even be higher if I would have joined your service before august of last year.  But I wasn't lucky enough to find your site. With a fairly good sum of money invested this is a fairly healthy return.   Having 8 positions over 40% one as high as 72%, a stock called JBL ( I don't even have a clue what they do or who they are ), things are fantastic!  

I sincerely mean the above.  the numbers are astounding.  I listen to peers who are into the market and think I am crazy, and they are trying to just get back to even. 


This note of praise for you and GetFolio is a little overdue. It has been a very good year since I discovered GetFolio, this past February, in a message board of a stock I owned that had crashed hard. As soon as I finished reading the information on your site, I knew that your contrarian philosophy meshed with my own and I quickly learned how to "protect my downside". Selecting the entry point based on your technical analysis of a "crashed stock" and scaling into a position is unquestionably the magic of what makes GetFolio so successful. Yes, I have had temporary losses when stocks have gone to second, third and fourth buys but I know that I will get close to the bottom and with just a small recovery, I am in the black. I want to note, that as I write this in September, nine months after finding GetFolio, the market is negative and I have given up a reasonable amount of my gains this month. Nevertheless, my return has been over 50% for nine months and I am trading with a considerable amount of capital.  Now, the return is a little higher because once I was fully invested in May, I sold stocks as they reached the top of the index chart and the top of the trading band. Because of losses from my pre- GetFolio days I have been able to offset many of the short-term taxable gains. I do not plan to be as aggressive in the future because of the tax impact. Additionally, I have used margin and although it has successfully increased my returns, I believe that the extra stress level is not worth the extra return and I will be reducing the margin level as stocks reach the top of the index and trading bands. 
I hope that you do this forever.


Up 4.4% so far after a month, so it looks like I'm on track. Thanks for the service. Your plan is certainly worth more than the price of admission over time. I'm sure it's a lot of work. So thanks for the effort. Perhaps your contribution goes beyond monetary gains for a little guy like myself. It allows me to reasonably plan for a future that includes the security of myself and my family as well as the additional time I'm able to spend by not pouring over info myself. That alone is worth more than you could imagine. Multiply that by a thousand members and your true worth might be realized.


I started using the GetFolio strategy in mid-February of this year on a gradual basis to gain a thorough understanding. I'm still learning. I tend to be a shorter-term holder by selling when the position gets in the 5% to 10% return range. I've never had to average down more than once in the process. To-date, my return is approximately 26%. Not bad for 6 months.


I began investing using GetFolio' recommendations on July 25 (about 4 weeks ago). I have acquired 27 stocks, with 3 of them reaching the 2% purchase stage. I am approximately 1/3 invested (in terms of the original planned outlay). To date, net of commissions, I am up 7.6%, which I consider just short of remarkable, given the squirrelly market we have been in. I am impressed with your logic, and now more-fully appreciate the value of your recommended strategy for indexing into a specific stock.  Based on these initial results, and the strategy overall, I am giving serious consideration to "upping the stakes" as it were.

Thank you for the opportunity to become involved in your strategy, as well as being so accessible and responsive to my questions. I should think that aside from the financial rewards you are receiving both personally and through your subscribers, you must get a great deal of satisfaction knowing that so many of your subscribers are achieving such excellent results. I also believe that you retain the feeling of a "family".


I have Been a subscriber for awhile and I love it. I am having fun. And thanks
for a simple great system.




I'm just in an ebullient mood this morning and wanted to say thanks again for the fantastic system!


I would just like to say that I have had my subscription cost repaid several times over with the stock picks that you have made. I like the style and philosophy. My immediate needs are to build a cash base and invest in the style that you recommend. I have been managing my own assets, and it is really empowering. I am clinging to your advice to use one method and not mix different investing philosophies. This is the best advice you've given, and probably the one that needs emphasizing the most. Thanks for the solid info!


The more I use your system, the more I am sticking strictly to your rules.  Every adjustment I had
made (using my own volatility number, etc) turned out to be a mistake, so now I just follow the program as mechanically as I can and the results have been terrific.  Thanks again, Moti, for all of your help.


All I can say is WOW. I am sleeping better!!! No reply necessary 

Thank you 

I am a new subscriber who is currently enjoying a 19.36% gain on your picks over the short period I've been in. That's 471.13% annualized - not that I expect to maintain this stellar rate! During that same period the S&P has only gained 2.87%. As your methods match my temperament and financial goals perfectly........

First of all, I want to say thank you. I had a similar strategy to yours going for a while, but it was a tremendous pain to do all the research on a weekly basis (during my only time off of work) to find the good stocks that were distressed. You have made my life a lot easier...

I'd like to start out by commending you on a wonderful Web site and what appears to be a fantastic trading strategy that minimizes risk while maximizing upside potential. You have truly opened my eyes to the importance of risk management, and I thank you for that. The knowledge I've gained in a short time on the merits of good portfolio management is well worth ten years' worth of subscription fees. I've already told at least a dozen colleagues about you and your site

I have been a subscriber for over 5 months, and traded over 30 stocks in that time period. To date I am still baffled by your accuracy rate, and your methodology.  Your money management concepts are excellent, and your direct approach and mannerism makes the whole experience of learning pleasant.  I did not expect that much knowledge on your site.  All I expected to get was a list of stock picks.  I was pleasantly surprised, and wanted to thank you for your time.

I was planning a little longer note to sing your praises for what I can see to be a wonderful system of investing. Your theory of how to scale into positions alone is worth far more than the subscription price. The stress has gone away and with your stock picks profits have come along.

I would like to start by saying in the 3 months I have been a subscriber I have an averaged 20% returns on my GetFolio positions/trades, while my other positions have crashed since mid March (some as much as 60%).  With these types of results I am going to a single trading systems based on your model.  You are absolutely correct when you say it is impossible to operate under 2 systems.  Thank you for a wonderful approach to the market. Jeff

I am a current subscriber to your service, and have been looking for years for a good strategy for locating turnaround stocks. The basic philosophy you use instinctively makes so much sense that I can't believe more people don't follow it.

When I was new to the market, I tried this strategy without having the experience or technical skills to locate a bottom, and without the high criteria you have for solid, quality companies. I also went after too many small and micro cap stocks, which of course often keep on declining. But even after accounting for the dogs and mistakes, there were still some striking successes.

Everyone in the technical world says locating a bottom is extremely difficult. Maybe that's why it requires specialization, and why it's a profitable specialty to have. I am so glad to be able to subscribe to your pick list, and know that they are all solid companies which are on sale and nearing an intermediate bottom.

The Indexing is interesting too. My first reaction was that it would cause you to be under invested in stocks which rebounded more quickly (which one would normally consider better stocks), and over invest in companies which plunge further than expected (which would seem to be not as good as group to load up on). However, if the criterion is that they are all good companies, and will all rebound, perhaps the stocks that are on sale by a greater percentage are the ones to load up on.


Your Indexing concept is very interesting.  I am an experienced investor, and have been playing a similar strategy to yours, but with too much stress. Your strategy seems much better structured than mine, and I think I'm going to take your large cap approach to heart, mainly for the sake of lowering my blood pressure a few points

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