Einstein is the Sector BPI portfolio up for review this morning. One change made to the investment quiver is the addition of Developed International Equities (VEA) and Emerging Market Equities (VWO). Neither asset class is currently recommended for purchase so now is a good time to add these two additional securities to the investment quiver.
The Kipling spreadsheet is used to determine is equity asses are a buy. Currently, VTI, VOO, and ESGV are all positioned as a Buy.
Einstein Security Holdings
Below are the current holdings in the Einstein. Nearly 39% of the portfolio is held in cash. Limit orders are in place to use much of this money that is held in a money market account. This is one portfolio where the owner needs to hold cash as it will be needed sometime this year.
No sectors are in the oversold zone so ETFs with the gray background are not “available” for purchase.
Einstein Manual Risk Adjustments
The SD Multiplier was adjusted to 1.69 so the Stop Loss for VTI adjusts to 8.0%. This is one of the risk controls used within the Kipling spreadsheet. The Maximum Portfolio Risk was moved up to 9.6% (purple arrow) which in turn will leave at least $39,000 in cash (green arrow). The Maximum Portfolio Risk setting controls how many shares are recommended (9th column from the right) for purchase. I then set the Shares to Hold in the 8th column from the right.
Orders to purchase 20 more shares of VTI and 120 more shares of ESGV are in place.
Einstein Performance Data
Over the past 25 months of operation the Einstein trails the SPY benchmark. This gap will not be closed if the market continues to rise as the cash is a drag on performance. There is a good chance the Einstein may catch the AOR benchmark sometime this year.
Einstein Risk Ratios
The expression “Cash is King” is not always true, particularly when the market is moving up as it did in 2023. This shows up in both the Information Ratio and Jensen Alpha or Jensen Performance Index. Both are in negative territory and that indicates the Einstein is a risky portfolio. Cash is considered to be risk free. This is not always true.
The Einstein only joined the Sector BPI investing model in early November of 2023 so we don’t have much data to go on. 2024 will be a good test for the Einstein.
Questions are always welcome so post them in the Comment section provided with each blog post.
Discover more from ITA Wealth Management
Subscribe to get the latest posts sent to your email.
You must be logged in to post a comment.