BRK.B, JPM, JNJ, PG, KO, PEP, XOM, CVX, ABT, MMM, TXN, NEE, PM, ABBV, MRK, WMT, COST, MCD, HON, CAT, LIN, UPS, RTX, LOW, HD, WFC, CSCO, AMGN, BMY, SPGI

1. Forward P/E must be at or below the stock's own 10-year median P/E, or below the sector median — whichever is more conservative. No exceptions for "growth premium" narratives.
2. Dividend payout ratio must be between 25% and 65% of free cash flow (not earnings), with at least 7 consecutive years of dividend increases and no cuts in the past 15 years. Payout history is verified manually against the load report before any order is placed.
3. Debt-to-EBITDA must be 3.0x or lower, interest coverage ratio must be 5.0x or higher, and free cash flow must have grown in at least 4 of the last 5 fiscal years. All three sub-conditions must pass simultaneously — a partial pass is a full fail.
4. A written load report must be completed and reviewed for at least 72 hours before entry. No position may be initiated the same day research is finished, regardless of price movement in the interim.
5. Broad market condition check: if the S&P 500 is more than 15% below its 52-week high, new entries are paused entirely until the index reclaims that threshold on a weekly closing basis — capital preservation takes priority over catching a falling position.

1. Trailing stop of 12% from the highest closing price reached since entry. The stop is recalculated quarterly when the load report is updated, not tick-by-tick. Intraday breaches below the stop level do not trigger a sale; only a confirmed weekly close below the threshold does.
2. Thesis invalidation exit: if any of the three core entry conditions (valuation, dividend health, balance sheet) deteriorate to a level that would have prevented the original purchase, the position is flagged for review. If two of the three conditions are violated simultaneously, the position is exited within the next two trading sessions regardless of current gain or loss.
3. Profit target: at a 40% cumulative gain from cost basis, one-third of the position is trimmed and proceeds are held in the cash reserve. The remaining two-thirds continue to be held as long as the thesis remains intact, allowing dividend compounding to continue without surrendering the full position to a single valuation call.

- Base allocation: 3.5% of portfolio per position
- Scale-up condition: If a position has been held for at least two full quarters, all three entry conditions remain intact or have improved, and the stock has not yet reached a 20% gain from cost basis, an additional 1.5% allocation may be added — bringing the maximum single-position size to 5.0%. Only one scale-up is permitted per position, ever.
- Max concurrent positions: 20
- Max single-position concentration: 5.0%

- Max portfolio drawdown before going to cash: 18% from the most recent all-time high portfolio value. If this threshold is breached on a monthly statement basis, all positions with unrealized losses greater than 10% are exited and proceeds move to short-duration Treasury ETFs (e.g., SHV or BIL) until the portfolio recovers to within 10% of its high-water mark.
- Sector concentration limit: 20% of total portfolio in any single GICS sector. Utilities, Consumer Staples, and Energy are each individually capped at 15% given their sensitivity to interest rate and commodity cycles that Gerry acknowledges he cannot model with full confidence.
- Correlation check: No more than 4 positions may share both the same sector and a 12-month rolling return correlation above 0.80 with one another. Before any new position is added, it is compared against existing holdings in the same sector using the prior year's monthly return data. If the correlation threshold is breached, the new position is held on the watchlist until a lower-correlated alternative is identified or an existing holding is rotated out.

- (Will