There’s an uncomfortable feeling every disciplined investor has to face eventually: watching a position you sold for a gain go on to make way more money without you. I’ve got one from this week. I’m not sharing it to beat myself up—it’s just that this trade exposes something more useful than a few points of missed upside. It’s about the real tension between process discipline and the evidence. And it leads directly to a quality-screening decision.
On April 30, I got aggressive in my Durable Growth portfolio. Among several smaller names, I bought Deckers Outdoor (DECK) at $88.00. The fundamental scores on Ziggma were screaming Growth 81, Profitability and Financial Health 100, and a total score of 96 out of 100. I checked all the technical boxes and that looked good, so I went long, and soon watched the price increase quickly. On May 18, however, I sold DECK at $96.65, a clean gain of just under ten percent in under three weeks.
By any rational risk framework, that’s a good trade. I don’t second-guess the buy. The sell is another story. Because DECK closed last Friday $106.67 and opened this morning at $107.50. So in the days right after I sold the position, I left another 10% on the table. And the reason I left it there? The very disciplined framework I rely on to keep me solvent through cycles.
Here’s what happened mechanically. My Four-Gate Defense flagged an impending bear phase for the broad market. I respect that signal as standing policy—capital preservation comes before opportunity, always. A position that passes the gates on entry can still get trimmed when the macro tape turns sour. So I backed off. The discipline did exactly what it’s supposed to do. The problem is that the discipline and the subsequent evidence have since pointed in opposite directions. I’ll own that openly.
What the evidence showed was a catalyst I underweighted. Deckers reported fiscal 2026 fourth-quarter and full-year results after the close on May 21, and they were not merely good — they were a record. Fourth-quarter net sales came in at $1.12 billion, up roughly ten percent year-over-year, against a full-year figure that climbed nearly ten percent to a record $5.47 billion. HOKA, the engine of the whole story, grew its revenue about fifteen percent in the quarter, and management guided forward above where the Street was modeling. The two-session continuation rally from the low-$100s into the high-$107s was not noise; it was the market repricing a company whose earnings quality is improving, not eroding. My exit landed one trading day before the print.
This is worth dwelling on, because it generalizes. The Four-Gate Defense is a market-state tool. It told me—correctly, in its own terms—that the index was entering a vulnerable phase. What it couldn’t tell me, and what no top-down macro gate is built to tell me, is that a single high-conviction name was about to deliver a fundamental surprise strong enough to override the tape for that one security. The gates are a portfolio defense, not a single-stock thesis. I mixed the two on May 18. The lesson isn’t to distrust the gates. It’s to separate the macro reduction decision from the security-specific catalyst calendar. When a name you hold is within a week or two of a reporting date with credible upside, the gate signal should argue for trimming beta elsewhere first and letting the catalyst name report. I did the reverse.
Now to the live question: what do I do with the extra cash from selling some solid positions on May 18? My portfolios have been sitting on an oversized cash position since February 27. The temptation after a week of strong corporate earnings is to conclude the bear phase was a false alarm and redeploy in size. I’m resisting that. Strong earnings are a coincident-to-lagging signal—they confirm the quarter that just ended, not the quarter ahead. The gates fired on forward-looking conditions, not trailing fundamentals. They’re not actually in contradiction; they’re measuring different things on different clocks. What earnings season does legitimately change is which names deserve the cash when I deploy it. It’s steering selection, not timing. That distinction is the whole discipline.
Which brings me to Nike, and to a removal I’ve been considering for a while.
NKE currently sits in my top-quality fifty North American companies—the Quality 50—and it no longer earns that seat. The athletic footwear industry is one of the clearest live examples of bifurcation I can point to. On one side: share-leaders defending mature, slow-growth positions. On the other: challengers compounding revenue and earnings at double the rate. Nike is the largest by far—roughly a quarter of global footwear revenue—and it’s also plainly the worst-performing of the major names on the metrics that matter to a quality screen. Its relative corporate fundamental scores: Growth 27, Profitability 77, Financial Health 77, aggregate 42. Last fiscal year, revenue contracted about 10%. Greater China was the worst-hit region, with quarterly profit there collapsing by nearly 90%. The franchise is mid-turnaround under new leadership. The only region genuinely holding up is the US domestic market—which is exactly the wrong shape for a company whose entire historical premium rested on global dominance.
A quality screen is forward-looking by design. It’s meant to hold companies with widening earnings power, margin trajectory, and moat—not companies managing a defense of eroding ground while hoping a new collection reverses the China bleed. Compare the trajectories honestly. Deckers just printed a record year on HOKA’s momentum. Asics closed its strongest fiscal year ever, with revenue up nearly 20% and operating income up over 40%. On Holding continues compounding at close to 30%. Even Anta, the Chinese leader, grew double digits and took a 29% stake in Puma in January—a clear signal about where the competitive initiative now sits. (Hint: not Beaverton, Oregon.) Against the global field, Nike is the laggard on growth, regional breadth, and earnings direction. It fails the screen on its own merits.
So the action is straightforward. And the irony isn’t lost on me. I’m removing the industry’s giant from my quality list the same week I’m ruing the sale of the industry’s quiet compounder. Both decisions flow from the same principle: hold the companies whose earnings are getting stronger, defend capital when the tape says defend, and never confuse the size of a franchise with the quality of its forward earnings. Nike is large. On current evidence, it is not high quality. DECK was—and regrettably, I let the macro gate talk me out of it one day early.
The cash stays mostly parked for now. One reason is that I’m busy getting the new billcara.com website organized for a hopeful June 1 launch. I will also be reorganizing the North American Top-Quality Companies watchlist, which may impact Portfolios 1 (Top-Quality) and 2 (Maverick Dow 30).
In closing, I’ll reiterate that the bear-phase signal I reported on hasn’t been retired by one strong earnings season. Not yet, although I’ll consider adding equities. Regarding the long-term plan, I’d rather miss the first leg of a sustained advance than abandon the framework these portfolios are built on. But when I do deploy, the names will come from the winning side of an industry—and if it’s footwear, Nike won’t be among them.