Trading systems
Value systems: buy a business, not a chart
Every system here starts from a claim no chart can settle: a share is a fractional stake in a business, and the business has a value independent of today's quote. Where they differ is what they will accept as evidence. Graham wants a checklist a clerk could verify from the accounts; Buffett wants a judgement about competitive position that no screen can produce; Lynch prices the growth; the Dogs and the dividend growers read the evidence off the payout itself.
The claim it rests on
Price and value come apart for years at a time, and the gap closes often enough to pay you for the wait.
Systems in this style
5 systems
- Value & business qualityBeginnerMechanical
Dogs of the Dow
Michael B. O'Higgins
Once a year, buy the ten highest-yielding stocks in the Dow in equal amounts, hold them untouched for twelve months, then re-rank and start again.
- Holding period
- One year
- Time needed
- Twenty minutes a year
- Value & business qualityBeginnerMechanical
Dividend Growth Investing
Popularised through the Dividend Aristocrats framework (S&P, 1989)
Own companies with long records of raising their dividends — funded by growing earnings and a sound balance sheet — reinvest the payments, and sell only when the earnings behind the next raise stop growing.
- Holding period
- Years
- Time needed
- An hour per reporting season
- Value & business qualityIntermediateMechanical
Graham Defensive Investor
Benjamin Graham
Screen for companies that are large, financially sound, consistently profitable and demonstrably cheap, then hold twenty of them and re-check once a year.
- Holding period
- A year or more
- Time needed
- Two hours a quarter to re-screen
- Value & business qualityIntermediateMechanical
Lynch GARP (Growth at a Reasonable Price)
Peter Lynch
Buy companies whose earnings are growing faster than the multiple you are paying for them, with little enough debt that you can wait for the market to notice.
- Holding period
- One to three years
- Time needed
- Two hours per position per quarter
- Value & business qualityAdvancedDiscretionary
Buffett-Style Value Investing
Warren Buffett and Charlie Munger
Buy a business you can genuinely explain, with a durable competitive advantage and management you trust, at a price meaningfully below what it is worth — then hold it for years.
- Holding period
- Years
- Time needed
- Tens of hours of research per name, then quarterly tracking
What they have in common
- Holding periods measured in years, and a deliberate refusal to act on price alone
- Most of the work happens before the purchase, not after
- All of them accept long stretches of underperformance as the cost of the method, not a signal to change it
- Few offer a mechanical sell rule — the annual reselection systems are the exception — and that is where most people running them come unstuck
The failure the style cannot design away
The market can be right. A statistically cheap company is often cheap because its earnings are about to fall, and a checklist cannot tell the difference between a temporary problem and a permanent one — that judgement is the entire job, and it is not in the ratios.
These are documented methods described for study. Nothing here is investment advice, a recommendation, or a claim about future returns — every system on this page has losing periods, and the pages say where.
Reading about a system is not having one.
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