The thinking behind HELIOS and the ideas we threw away.
HELIOS started with one goal: a portfolio that can grow faster than the market over time without hiding the risk of a blow-up. Finding something that looks good on paper was never the hard part. The hard part was staying simple and honest when every instinct says to add something clever.
These are the seven principles we hold to. They explain the why, not the how — the exact rules and settings are deliberately left out.
Start with something proven — then leave it alone.
HELIOS is built on market effects that have been studied for decades, show up across many markets and periods, and make intuitive sense. Not on a pattern someone spotted last month in a single dataset.
The temptation is always to "improve" a proven idea with extra filters and conditions. In our experience that usually weakens the very thing that was working. The first, more elaborate version of HELIOS did worse than the plain one. So a new idea has to prove it beats the simple version before it gets in — and almost nothing does.
02
Keep the risk steady, not the bet size.
To do better than the market over time, a strategy eventually has to lean in. But leaning in carelessly is exactly how strategies like this blow up: they end up most exposed right before the worst moments.
So HELIOS doesn't hold a fixed amount of stock. It aims for a fixed amount of risk. When markets are calm, that means holding more. When they turn rough, it means holding less — adjusting as conditions deteriorate, before losses have a chance to compound.
In plain terms
A sailor doesn't keep the same amount of sail up whatever the weather. They let more out in a light breeze and reef it in as the wind picks up, so the boat stays steady. HELIOS treats the market the same way: the sail changes so the ride doesn't.
Fixed bet size
The same amount stays invested, so the risk you're carrying balloons exactly when markets turn rough.
Fixed risk — how HELIOS works
Holdings shrink through the rough patch, so the risk you're carrying stays roughly steady.
Amount investedRisk being carried
Illustration of the idea only — not real data.
The core idea
Because the risk stays roughly constant, the character of the returns stays stable too. That turns leverage into an honest dial — a clean trade-off between return and drawdown that can be set to what an investor can tolerate — instead of a gamble that quietly gets worse.
Almost every other decision in HELIOS exists to keep this true.
03
Markets have weather. Cash is a position.
HELIOS keeps a running read on the health of the overall market, and that reading decides how much of the portfolio is actually invested. When conditions turn hostile, the honest move is to step back and hold cash — not to keep trading to look busy.
That has a cost we accept openly: we would rather miss part of a recovery than sit fully exposed through a stretch that is punishing this style of investing. Sitting patiently through the strategy's own rough patches is part of how it works, not a failure of it.
04
Add something that behaves differently — not insurance that fails you.
The obvious way to cut risk is to add a hedge. We tested that instinct hard, and it kept failing: the hedges that feel protective tend to let you down at exactly the moment you need them.
What actually reduced risk was different: a second source of return that simply moves to its own rhythm — in HELIOS's case, a sleeve of commodities sitting alongside the stocks. It doesn't have to rise when stocks fall. It only has to be genuinely unlike them. Diversification does the work that clever hedging only pretends to.
05
Most of the work was deleting things.
This is the part outsiders underestimate. Most of our effort went into building clever ideas, testing them honestly, and throwing them out when they didn't earn their place. Six that sounded right and didn't survive:
Betting bigger on fewer, higher-conviction stocks
WorseThe ranking isn't precise enough to bet that finely. Fewer names just meant more random noise, with no reliable gain.
Letting winners grow into oversized positions
A wash, at bestIt tilted the portfolio toward stocks that had already run too far — just before they cooled off.
Holding positions longer to "let winners run"
WorseThe edge is strongest when it's fresh. A stale portfolio rides fading names and is slow to cut the losers.
A volatility hedge sized to how much the portfolio held
A trapAs the portfolio pulled back in a storm, the hedge shrank with it — so it cost money in calm markets and was gone when the crash arrived.
Betting against the weakest stocks to offset the strongest
No hedgeBoth sides follow the same style, so in a panic they fall together. It didn't protect anything — it just cost return.
Extra rules to limit drawdowns
Not worth itThey gave up meaningful return for almost no extra protection, because holding risk steady already does that job.
Every one of these should have helped. Testing them honestly — and having the discipline to throw them out — is the actual work. The lesson we took: cut risk by diversifying, not by endless tinkering.
06
Be honest about the numbers — especially the flattering ones.
It's easy to make a strategy look brilliant on paper. Test it only on companies that still exist today and you quietly skip every one that went bust — survivorship bias. Let a little hindsight slip into the rules and the past looks far more predictable than it really was.
We go out of our way to remove both effects, even though it makes our results look worse. When our most rigorous test cut the headline return meaningfully, we kept the lower number. A track record you can trust is worth far more than one that flatters itself — and every rejected idea above is a logged, stress-tested result, not a hunch.
07
Be honest about the risk, too.
HELIOS aims to beat the market, and that ambition comes with real ups and downs — including real drawdowns. A version with high returns and no pain doesn't exist, and we won't pretend otherwise.
The strategy doesn't try to predict the market. Its returns come from staying invested and disciplined through ordinary noise, while pulling back automatically in genuine stress. The practical upshot is simple: size any investment to a drawdown you could actually live through.
A proven idea kept simple, risk held steady so leverage becomes an honest dial, a sense of market weather that isn't afraid of cash, one genuinely different diversifier — and a long list of clever ideas we had the discipline to delete.