Newton’s First Law of Portfolio Design
Why uncorrelated trades keep your capital in motion
Newton’s First Law and Portfolio Design
In the 17th century, Isaac Newton wasn’t thinking about the stock market — but he was obsessed with why things move and why they stop. Sitting in Cambridge, fresh from developing calculus, he formalized what we now call Newton’s First Law of Motion:
An object at rest will stay at rest, and an object in motion will stay in motion, unless acted upon by an external force.
He refined this from Galileo’s observation that a ball rolling down a slope will keep going unless friction or resistance slows it. Newton extended the idea — motion (or rest) isn’t special, it’s the default unless disrupted by something external. In markets, those disruptions come in the form of policy changes, liquidity shocks, or global events.
The Portfolio as an Object in Motion
A portfolio has its own “motion” — momentum created by its mix of trades. Concentrate too heavily in one correlated theme, and your entire portfolio moves (and stops) with a single macro force. Diversification, when done properly, creates multiple independent sources of motion — so one shock doesn’t stall everything.
That’s why our current construction spans very different macro drivers:
Gold miners — hedging against inflation and currency debasement
Polish equities — exposure to European emerging market growth
Live cattle — agricultural trade driven by supply/demand dynamics, not central banks
Currencies against the dollar — positioning for U.S. dollar weakness
The Force Behind the Motion: Price Signals
None of these trades are based on guesses or narratives alone — they’re built on price.
Gold miners are trending higher on strong breadth.
Polish equities have broken out relative to the region.
Live cattle remains in a clear uptrend despite broader commodity chop.
Global currencies are breaking out against the dollar.
Price acts as the confirmation that the “object” is already in motion. It’s the market’s way of telling you which forces are dominant — and which ones you can ride.
The Newtonian Edge
By structuring the portfolio across uncorrelated trades, each with independent price momentum, we’re building something that can keep moving forward unless everything is hit at once. That’s Newton’s Law applied to capital: keep your portfolio in motion, reduce the friction, and let price lead the way.