Copernicus Portfolio Review: 13 September 2024

Hibiscus

This update or review of the Copernicus is incomplete as Yahoo closed the door on access to their security price data.  This change impacted the Investment Account Portfolio (IAM) software so I don’t have any way to download prices into that program.  I am in contact with the developers of the QuantIX software, but so far no acceptable solution.  [Since I wrote the above, the data download issue has been solved.  This is now a complete review.]

The Kipling software continues to be viable if one uses the Tiingo Adj. Price icon to download data.

Copernicus Investment Quiver and Current Holdings

Below is the current make-up of the Copernicus.  Since cash is limited I only have one order in place to pick up a single share of VTI.

Since the IAM program is down I have no way to report on the IRR performance of the Copernicus let alone any of the five risk metrics.  If and when the IAM data problem is solved I will come back and update portfolios such as the Copernicus. [This is the update.]

Copernicus Security Holdings

If one wished to simplify this portfolio simply use one Exchange Traded Fund, VOO or SPY.  Both cover the S&P 500.  It is extremely difficult to outperform the S&P 500 index.  There is a lot of overlap between the four ETFs.  By that, I mean stocks held in one of these four ETFs can be found in the other three ETFs.

If advising a young investor, save each month and when there is sufficient cash, invest or purchase shares of VOO.  Do this for 40 years and one is nearly guaranteed to have a nice retirement fund.  Nice is defined as in the millions of dollars.  It depends on how much one can save each month.

As one gains investing experience branch out and begin to create a second portfolio modeled after the Asset Allocation system as we see with the Huygens.

Copernicus Performance Data

Since 12/31/2021 the Copernicus generated an Internal Rate of Return (IRR) of 18.1%.  The total return over this period is 55.6%.  We have experienced some wonderful years of market performance since Covid19.

How can it be that the Copernicus is performing so much better than the S&P 500 (SPY) when the portfolio is using index ETFs that track this same index?  It has to do with dollar-cost-averaging.  2022 was a poor year for equities.  The owner of this portfolio continued to add money to the Copernicus when the market was down.  When prices were depressed more shares were purchased.  Now that the market recovered and is quite high, those shares purchased at lower prices is paying off.

Copernicus Risk Ratios

While investing only in U.S. Equities is considered high risk, the data below shows otherwise.  It all depends on ones outlook.  If you are young and have the possibility of investing for 30 or 40 years, one can take on more risk and follow the Copernicus model.

My preference, when it comes to money management is to not only diversify the portfolio using ETFs vs. individual stocks, but to also diversify across different portfolio models.

Suppose you are a young couple just getting started and interested in preparing for retirement even though it is so far in the future one is not even thinking about it.  THINK ABOUT IT!  Here is my advice.

1. Set up one Intelligent Portfolio with Schwab.  The Schrodinger is one such portfolio.
2. Begin a Copernicus portfolio and make sure it is a ROTH IRA.  Pay taxes now as there is a high probability taxes will be higher in the future.  Max out your Roth each year.
3. Set up a third portfolio.  This time diversify across the globe using an array of ETFs as one finds in the Huygens and Pauling portfolios.  This is known as an Asset Allocation model and this approach to investing is one used by money manager where they will charge somewhere between 40 and 125 basis points.  Do it yourself rather than help someone purchase a yacht with your fees.

Below is the risk ratio data for the Copernicus.  Most readers are familiar this information after following it for several years.

Pay most attention to the Jensen Performance Index and the Information Ratio.  Third most important value is the Sortino Ratio.  Information on what these ratios mean can be found on the Internet.

Returning To Investing Roots: 5 August 2024

Huygens Asset Allocation Portfolio Review: 10 April 2024