Copernicus Portfolio Review: 4 June 2024

Decaying Boat Pier

Copernicus is one of two portfolio I highly recommend for working young folks who have little time to spend on portfolio management.  The other obvious choice is the Schrodinger.  The goal of the Copernicus is to invest in U.S. Equities and never sell unless there is an emergency.  While I use four equity ETFs one could easily cut this to one or two.  My two recommendations are VOO and VTI.  I have a preference for Vanguard securities as they tend to be low cost and one becomes an owner of the company when holding Vanguard share.

Copernicus Portfolio Holdings

As new cash is added and dividends declared I’ve slowly been picking up shares of VOO and VTI.  Limit orders are in place to use up the available $2,668 cash.  When I set limit orders I generally stagger then at levels 1%, 3%, 5%, 7% and 10% below the current price.  If and when the market dips shares are purchased.  This is known as dollar-cost-averaging and it pays off assuming the market is higher in the future.  This effect paid off for the Copernicus when many shares were purchased at lower prices in 2022 when U.S. Equities were in a funk.  See the performance data below.

Copernicus Performance Data

Since 12/31/2021 the Copernicus is outpacing all possible benchmarks.  Without a lot of management fuss the straight forward investing model of saving and purchasing equity shares ends up as the top performer among all ITA portfolios.  Keep in mind there is no downside protection to the Copernicus.  Should we experience another 2008 meltdown, this portfolio would be vulnerable whereas we would expect the Schrodinger to perform much better.  All Sector BPI portfolios have a built in downside protection plan.

Copernicus Risk Ratios

All five risk ratios are extremely high and are difficult to maintain at current levels.  Even so, the Jensen is a tad higher in June vs May.  It is still very early in the month so don’t pay too much attention to the June values.

Once we clear August of 2023 the slope of the Jensen Alpha stands a good chance of switching from negative to positive.

Despite investing only in equities, the Jensen value (greater than 10) indicates this is not an especially high risk portfolio.  Nevertheless, if one is retired, this is not the portfolio for you.  This type of portfolio is designed for those with at least another 10 years of savings ahead.  If one has other Asset Allocation portfolios such as the Pauling or Huygens, then adding a Copernicus style portfolio is not a bad idea.  Keep it to no more than 10% of your total investments.

“Sell In May And Go Away”