I am presently in the process of moving funds around a bit – and I also have to make mandatory withdrawals from some of my retirement accounts – so this is one portfolio that gets affected. Although the Dirac portfolio was last year’s best performing portfolio (on a percent gain basis) it has disappointed a little so far this year. The main reason for this is (maybe) because I have not been able to find the time to analyze individual stock performance (from over 500 stocks) so as to revise the 40 “arrows” (stock) in the Dirac quiver. As a result, I am taking $40,000 out of this portfolio. I am not reducing my investment in this portfolio simply because it is not performing as well as it did in 2020 – that would be totally the wrong reason for me to cut this portfolio. We expect portfolios/strategies to behave differently in different market conditions, and this is the reason why we diversify our investments (both in terms of asset selection and investment strategy) – but I feel that it is prudent for me to reduce my exposure slightly since the portfolio does not offer the same level of diversification as can be achieved through a few ETFs and may be subject to more systemic risk than I should have in relation to my total portfolio/investment accounts.
We’ll start by taking a look at current holdings:
where we can see that I am currently holding 10 stocks in this portfolio despite the fact that I have been using the BHS system with a 20 asset limit. I have been using 1 SD TSLOs with this portfolio and have been getting stopped out quite frequently – maybe another reason for lack-luster performance year-to-date. As I mentioned above, I am taking $40k out of this account – so it will leave me with current holdings plus just a little over $4k Cash.
Let’s check performance:
and we see the poor performance over the first five months of this year, despite strength in the benchmark S&P 500 ETF (SPY). I need to take a close look at this portfolio but, in the meantime I will reduce my exposure by taking the $40k out and I will reduce my maximum holdings from twenty to ten – thus keeping my dollar investment levels about the same. However, this will also reduce my level of diversification (that makes me a little uncomfortable) so I will have to keep this in mind.
Checking current rankings and recommendations we see the following picture:
where, after making the adjustments noted above, we see ten Buy recommendations and five discretionary hold recommendations. None of the current holdings are recommended Sells so I just need to decide whether to hold the existing discretionary Hold? recommendations or to switch them out for stronger Buy recommendations. Since I need a little more time to think about the future of this portfolio I don’t want to start over-trading it – so I will Hold my existing positions:
However, I will keep my tight 1 SD TSLOs in place – that will keep my portfolio risk to ~7%. I will not be making any position adjustments to this portfolio this month.