The “proven winner” filter is the most interesting and most fragile step in the funnel. Selecting on 10-year price compounding rewards companies that have already re-rated — run this same screen in 2015 and it likely misses the very names that now make the cut. Doesn’t kill the framework, but worth naming that what you’re really running is quality + yield + momentum, which is a fine factor combo, just a different animal than pure dividend growth.
The filtering process is more valuable than the final pick. Going from 39 → 8 → 3 without anchoring on a name you already like is harder than it sounds — most investors fall in love at step one and spend the rest rationalizing rather than eliminating. The 'proven winner' test is doing real work here: using price performance as a quality filter runs against the value investor instinct to find beaten-down names, but the data on momentum as a quality signal is pretty consistent.
What stands out is the discipline in the process. Each filter removes comfort. First the obvious names, then the familiar industries, then even the ones that look “pretty good.” By the time you’re left with one, it’s not luck. It’s elimination doing the heavy lifting.
The “proven winner” filter is the most interesting and most fragile step in the funnel. Selecting on 10-year price compounding rewards companies that have already re-rated — run this same screen in 2015 and it likely misses the very names that now make the cut. Doesn’t kill the framework, but worth naming that what you’re really running is quality + yield + momentum, which is a fine factor combo, just a different animal than pure dividend growth.
The filtering process is more valuable than the final pick. Going from 39 → 8 → 3 without anchoring on a name you already like is harder than it sounds — most investors fall in love at step one and spend the rest rationalizing rather than eliminating. The 'proven winner' test is doing real work here: using price performance as a quality filter runs against the value investor instinct to find beaten-down names, but the data on momentum as a quality signal is pretty consistent.
What stands out is the discipline in the process. Each filter removes comfort. First the obvious names, then the familiar industries, then even the ones that look “pretty good.” By the time you’re left with one, it’s not luck. It’s elimination doing the heavy lifting.