Einstein Portfolio Review: 6 October 2023

Structures along Route 395 in California

The Einstein portfolio is one of five Relative Strength portfolios tracked here at ITA.  There are some differences in the settings of the different portfolios which influence decisions.  For example, with the Einstein I am taking the long view in that the look-back period is longer and the investing model is the LRPC.  Fewer trades occur with these settings.

Einstein Security Recommendations:

The security recommendation worksheet shows the investment quiver and holdings for the Einstein.  The red arrow points to the one-year look-back period.  The blue-green arrow points to the number (4) of assets or ETFs to be held at anyone time.  The purple arrow identifies the LRPC investing model.

All four U.S. Equity ETFs are recommended for purchase at this time and the Einstein is currently holding shares in each ETF in addition to more shares in Developed International Equities (VEA). [All 190 shares of VEA were sold as I wrote up this blog post.]

Einstein Manual Risk Adjustments

The manual risk adjustment worksheet is where decisions are made.  One of the first is to adjust the SD Multiplier to 1.31 so the Stop Loss percentage for VTI is 8.0%.  The Maximum Portfolio Risk is 6.0%.  These are settings that help to control portfolio risk or at least influence the recommendations laid out for the money manager.

To achieve these results I have a Buy order in to purchase 30 shares of ESGV and a limit order set to sell 190 shares of VEA.  If both orders are struck this will leave over $8,000 in cash.  The owner of this portfolio needs to pull out cash before the end of the year and these decisions will permit that to happen.

As mentioned above, I just received notification all shares of VEA were sold out of the Einstein.

Einstein Performance Data

Over the past 21 months the Einstein continues to lag the S&P 500 (SPY) as well as four other potential benchmarks.  The only reference it outperforms is the ESGV security – and not by much.

Einstein Risk Ratios

How has the Einstein portfolio been performing when the Jensen Alpha is the measuring instrument?  Since June the value has improved so we are moving in the right direction.

The slope of the Jensen improved slightly since September and we want to keep that metric improving.

Until a new Speaker of the House of Representatives is selected and the U.S budget is finalized, don’t be in a rush to make new equity purchases.  I am setting Buy orders anywhere between 5% and 20% below the current price.  I’m not in a big hurry to fully populate all portfolios.