Einstein Portfolio Update: 11 February 2025

Freight train passing through Canby, Oregon.

Einstein is the portfolio up for review this morning.  As mentioned in a prior blog post the owner of the Einstein needed educational funds at the wrong time based on market action.  Selling shares in a down market is not conducive to producing good results.  As a result, this portfolio is an under-performer whereas the owners of the Copernicus and Schrodinger were adding new cash during the slow market of 2022.

Regardless of the investing model, try to increase savings when the market is in decline.  Right now the market is quite high so one might want to build up some cash reserves.  There comes a time in nearly every administration where there is a recession.  That is the time to pounce and increase equity (VOO) positions.

Einstein Asset Allocation

Below is the current asset allocation for the Einstein.  Several asset classes are far from the target percentage.  In general, equities are above target while the lower volatile asset classes (bonds and treasuries) are below target.  This will work to the benefit of the portfolio in an up market.  The reverse is true when the stock market declines.

Einstein Rebalancing Recommendations

The 6th column from the right lays out the first moves toward bringing the various asset classes back into balance.  To reduce taxes the plan is to use dividends and fresh cash to built up those asset classes below target.

Einstein Performance Data

Since 12/31/2021 the Einstein lags all five benchmarks.  AOR is the benchmark for this asset allocation portfolio.  The gap is very wide and may never be breached.  It will take a recession and a major infusion of cash to close the gap.

Einstein Risk Ratios

Growth or portfolio improvement is slow.  Comparing February 2025 data with February 2024 we see improvement in each of the four risk ratios.  As months go by, follow the Jensen Performance Index (also known as Jensen Alpha) closely as it is the most important ratio.

Comments are always welcome.