METHODOLOGY
From macro evidence to a documented allocation decision.
Meridian uses a structured monthly process to classify the prevailing macro environment, assess the strength of the evidence, translate that assessment into allocation implications, and document the risks that could require a different decision.
The framework is designed to improve consistency and reviewability. It does not eliminate judgement, uncertainty or the possibility of error.
A six-stage allocation process
Each monthly decision moves through the same sequence. The output of one stage becomes the input to the next, creating a visible reasoning chain from evidence to allocation.
01
Evidence inputs
02
Regime classification
03
Confirmation and confidence
04
Allocation implications
05
Risk controls
06
Documented decision
A monthly review does not require a monthly allocation change. Exposure changes only when the evidence and decision rules justify a different position.
01 — EVIDENCE INPUTS
The framework begins with multiple forms of evidence.
No single indicator determines the portfolio. Meridian organises evidence into broad categories and assesses whether the signals are consistent, conflicting or changing direction.
GROWTH
Evidence relating to economic activity, demand, production and the direction of the business cycle.
INFLATION
Evidence relating to price pressures, inflation momentum and whether those pressures are strengthening or weakening.
LIQUIDITY AND FINANCIAL CONDITIONS
Evidence relating to the availability and cost of capital, monetary conditions and broader financial stress.
LABOUR AND DEMAND
Evidence relating to employment, wages, consumption and the resilience or deterioration of underlying demand.
MARKET CONFIRMATION
Evidence from cross-asset behaviour that may support or challenge the macro classification.
RISK AND VOLATILITY
Evidence relating to market instability, concentration, correlation changes and the amount of portfolio risk the current environment can reasonably support.
The categories organise the analysis. They should not be interpreted as a complete list of every data series reviewed.
02 — REGIME CLASSIFICATION
Growth and inflation define the primary regime.
Meridian classifies the environment according to the direction of growth and inflation.
The regime labels provide a consistent way to organise evidence and examine likely cross-asset behaviour. They are analytical categories, not complete descriptions of the economy.
A regime classification does not imply that every asset will behave in a fixed way. Valuation, policy, market positioning, volatility and the source of the economic change can alter the result.
03 — CONFIRMATION AND CONFIDENCE
A signal is not automatically a decision.
RAW SIGNAL
The raw signal reflects the classification indicated by the latest available evidence before confirmation rules and broader context are applied.
CONFIRMED REGIME
The confirmed regime is the classification used in the published allocation process. It may remain unchanged when the evidence is not yet sufficiently broad, stable or persistent to justify a transition.
CONFIDENCE ASSESSMENT
Confidence reflects how consistently the available evidence supports the confirmed regime.
Meridian considers:
the breadth of supporting evidence
the strength of conflicting evidence
the persistence of the signal
the stability of the data
the degree of market confirmation
the risk of responding to temporary noise
Confidence affects the strength of the allocation response. It is not a claim that the classification is certain.
04 — ALLOCATION IMPLICATIONS
The regime informs the allocation. It does not determine it alone.
The current research universe includes broad exposure across five allocation categories.
US EQUITIES
Considered in relation to growth conditions, inflation pressure, financial conditions and the portfolio’s broader risk capacity.
LONG-DURATION GOVERNMENT BONDS
Considered in relation to growth deterioration, inflation risk, interest-rate sensitivity and whether duration is likely to diversify equity exposure.
COMMODITIES
Considered in relation to inflation pressure, supply conditions, economic demand and the source of the inflation impulse.
GOLD
Considered in relation to monetary conditions, real-rate pressure, uncertainty and its role as a diversifying allocation.
CASH
Used as an active risk allocation when the evidence does not justify greater exposure or when uncertainty should reduce portfolio sensitivity.
The framework does not assume that one permanent portfolio corresponds to each regime. Confidence, volatility, existing exposures and risk constraints can moderate the final allocation.
05 — RISK CONTROLS
Risk controls shape how conviction enters the portfolio.
01
Diversification constraints
The portfolio should not depend entirely on one economic outcome or one asset relationship remaining stable.
02
Volatility-aware sizing
The strength of an allocation should account for the amount of risk associated with the exposure, not only the expected direction.
03
Cash allocation
Cash can reduce portfolio sensitivity and preserve optionality when confidence is weak or risk is elevated.
04
Confirmation thresholds
The framework can require broader or more persistent evidence before recognising a regime transition.
05
Invalidation conditions
Each packet should identify developments that could weaken the current classification or require a different allocation response.
Risk controls can reduce certain vulnerabilities, but they cannot prevent all losses or guarantee a maximum drawdown.
06 — Monthly review
The decision is reassessed on a recurring schedule.
01
Update the evidence
Review the latest available macroeconomic, financial-condition and market information.
02
Reassess the regime
Determine whether the raw signal, confirmed regime and confidence level remain appropriate.
03
Review the allocation implications
Assess whether the existing allocation remains consistent with the confirmed regime, confidence and risk conditions.
04
Documented decision
Record what changed, what remained unchanged, why the decision was made and what evidence could require a future change.
Inactivity can be a valid outcome. Meridian does not change the allocation merely to create activity or produce a new narrative.
07 — Documentation
Every allocation should leave a decision trail.
The monthly packet is intended to preserve the reasoning available at the time of the decision.
Each packet should make it possible to review:
the confirmed regime
the raw signal where relevant
the supporting evidence
the conflicting evidence
the confidence assessment
the allocation implications
changes from the previous month
the principal risks
the conditions that could justify a different position
08 — Boundaries
The methodology has deliberate limits.
Meridian does not:
forecast exact market returns
identify short-term entry and exit points
select individual stocks
provide daily trading signals
assess a reader’s personal financial circumstances
guarantee that a regime classification or allocation decision will be correct
The framework is intended to organise uncertainty, not remove it.
09 — Limitations
A structured process can still fail.
01
Misclassification
The framework may classify the environment incorrectly or recognise a transition too early or too late.
02
Data revision
Economic information may be delayed, incomplete or revised after the allocation decision is made.
03
Changing asset relationships
Historical correlations and asset behaviour may change, particularly during periods of stress.
04
Implementation differences
Actual outcomes may differ because of timing, costs, taxes, liquidity, spreads, product structure or available execution prices.
05
Model and judgement risk
Rules improve consistency, but the choice of inputs, definitions, constraints and confirmation standards still involves judgement.
These limitations are part of the methodology rather than exceptions to it. The framework should be judged by the quality and consistency of its decision process, not by an assumption that it can eliminate uncertainty.
Read the Full Limitations & Disclosures
See the methodology applied.
The sample packet shows how macro evidence, regime classification, confidence, allocation implications and risk conditions appear in a complete monthly decision record.