If you don't know the story, he was operating a service station in Corbin, Kentucky in the 1930's when he started preparing meals for travelers and serving them in a tiny dining room. He had been cooking up meals for his younger siblings since he was a boy, so by then his culinary skills were quite good. However it was at that small restaurant that he perfected his now famous secret recipe of eleven herbs and spices that went on to make history in the fast food industry.

So what does this have to do with naked strategies? Plenty. It took Colonel Sanders years to develop his recipe. He was constantly testing it by adding this ingredient and taking that one out, until he had it just right. This is actually very similar to the process that cardiologist Lee Goldman used when he developed his "recipe" for making decisions about patients who were experiencing chest pains. His decision aide became known as "Goldman's Criteria" and was used by hospitals to make triage decisions. (See Blink by Malcolm Gladwell for more info.) Back to Colonel Sanders. . . The Colonel had hundreds of herbs and spices to choose from, but he had to test and test again until he found the right ones to use in the right proportions. Likewise, Goldman had a huge amount of medical data that was available on heart attack patients. He had to determine what factors were most significant in diagnosing a heart attack so he could separate the patients that needed to be admitted to the cardiac unit from those who could be sent home with aspirin.

With naked investment strategies, an expert analyzes past pricing data to determine what factors were present in winning portfolios. He or she then uses this past data to construct rules for making decisions going forward. Several of these strategies are detailed in The Naked Portfolio Manager.

So the next time you eat a piece of KFC chicken, remember that you may not have the secret to the Colonel's eleven herbs and spices recipe, but there is no secret to how to make better investing decisions. . . if you use naked strategies.