How My Quantvesting Framework Picks the Top 5 Stocks?

People often ask me a simple question:

How does your Quantvesting framework actually select the top 5 stocks?

This post explains the logic — without code, jargon, or complexity.

Step 1: Every Stock Is First Put into the Right Bucket

Before ranking begins, I classify each stock based on two things:

Business Quality

• X → Exceptional business
• H → High-quality business
• M → Medium-quality business

This reflects how strong, consistent, and reliable the business is.

Company Size

• LC → Large-cap
• MC → Mid-cap
• SC → Small-cap

So:

• X-LC = Exceptional Large-Cap business
• H-MC = High-quality Mid-Cap business
• M-SC = Medium-quality Small-Cap business

This ensures I don’t compare apples with oranges.

Step 2: Every Stock Is Evaluated Through Four Lenses

Each stock is scored across four dimensions:

1. Value

Is the stock reasonably priced today?

• How far it is from long-term averages
• Whether earnings justify the price

Lower stress on valuation = better rank.

2. Growth

Is the business growing?

• Sales growth
• Profit growth

Faster and healthier growth ranks higher.

3. Quality

Is the business durable?

• Profitability
• Cash-flow strength
• Scale and consistency

High-quality businesses survive cycles.

4. Momentum

How is the market treating the stock right now?

• Recent price performance
• Strength versus peers

This avoids buying into weakening trends.

Step 3: Ranking, Not Predictions

For every metric:

• Stocks are ranked relative to each other
• Better performance = better rank

No forecasts. No narratives. Just comparison.

Step 4: Balance Over Brilliance

Within each category (Value, Growth, Quality, Momentum), ranks are added together.

This ensures:

• No single factor dominates
• Stocks must do reasonably well across dimensions

Consistency beats perfection.

Step 5: Fair Comparison Comes First

Stocks are first ranked within their own conviction bucket (for example, X-LC stocks against other X-LC stocks).

Only then are they ordered across buckets using a pre-defined priority: Exceptional businesses first, followed by high-quality and medium-quality — adjusted for size.

This keeps risk under control.

The Final Output: Cumulative Rank

Everything flows into one number: Cumulative Rank (CumlRnk)

• Rank 1 = strongest overall balance
• Top 5 ranks = framework’s current best opportunities

No manual tweaking. No emotional overrides.

The Core Philosophy

Quantvesting doesn’t chase certainty. It improves decision quality.

It enforces:

• Discipline over emotion
• Structure over stories
• Process over prediction

And over time, that discipline compounds.

That’s the real edge.

Have a good day,
– AR