The Ship's Log

Most stock-scoring systems use some combination of price/earnings ratios, revenue growth, and analyst ratings. These are reasonable inputs. But they share a problem: they describe what a stock is, not what it's doing.

We wanted something that described motion. Direction. Acceleration. The rate at which conditions are changing — not just their current state. That's where fluid dynamics comes in.

Velocity as a momentum measure

In fluid dynamics, velocity describes how fast a fluid particle is moving and in which direction. We use an analogous measure to capture a stock's directional momentum — normalized for volatility, so that a stock moving steadily upward with low noise reads as "clean flow," the way water in a smooth pipe behaves differently from water churning through a turbulent section.

Turbulence as a penalty

Turbulence in fluids represents chaotic, energy-dissipating motion — the opposite of efficient flow. The model captures the equivalent in stock behavior: erratic price action, reversals, unpredictable gaps. Turbulent names get penalized in the final score, and that penalty scales with the current market regime. A name that would be acceptable in calm markets may be filtered out entirely when the overall Reynolds number rises.

Acceleration — the signal that earns its keep

The most informative signal in the model isn't where a stock is — it's how fast conditions are changing. A stock that's been improving and is still accelerating is a different proposition than one that's leveled off at the same score. This acceleration measure is the signal that most reliably identifies names early in a new move, before the broader market has priced it in.

The result is a composite score that captures direction, smoothness, and rate of change — all expressed in the same mathematical language used to describe how physical systems move. That's not decoration. It's the architecture.

Every Navier portfolio has a core — a risk-calibrated set of positions sized to your RA level. The growth sleeve sits alongside the core and serves a different purpose: it's where we take smaller, higher-conviction bets on names that scored well but carry more idiosyncratic risk than the core allows.

Why a fixed allocation?

The sleeve is sized based on a specific drawdown math: the allocation is set so that even if every sleeve position hits its stop-loss, the damage to the overall portfolio stays within a range that is uncomfortable but survivable — and recoverable without dramatically altering the core's trajectory. This math is disclosed to clients at engagement.

How candidates are identified

The model runs a secondary discovery process after the core is built. It identifies names that passed most core filters but were excluded due to characteristics like market cap, sector concentration, or volatility profile. These are names that scored on momentum and fundamental grounds but don't belong in the core — they belong in a smaller allocation with tighter risk management around them. Current sleeve candidates are disclosed to clients.

Hard stops are not optional

Every sleeve position has a hard stop-loss entered at the time of purchase. Not a mental note — an actual order. The sleeve is expected to have losses. The discipline is in taking them quickly when they come, so the winners have room to run.