Einstein Portfolio Update: 8 January 2025

Fall Memory

As we move into 2025 portfolios such as the Einstein will move toward greater simplification.  After a number of years of observation it is the most basic of asset allocation portfolios that are performing best, both from Internal Rate of Return data as well as reduction in risk (Jensen Alpha values).  The transition will be slow as I am not interested in selling at lower prices.

Different portfolios will have different ETF combinations, but in general all will hold a high percentage in U.S. Equities.

Einstein Holdings

Below is the current asset allocation and holdings for the Einstein.  Over the next few months the goal is to boost VOO up to 70% of the portfolio, BND to 15% and 15% to VEA.

Einstein Rebalancing Recommendations

Insufficient cash is available to make the transition from 13 securities down to three.  Limit orders are in place to sell all shares of 10 ETFs and as cash is raised the goal is to rebuild the Einstein where it will eventually hold only three ETFs.

Einstein Performance Data

Since 12/31/2021 the Einstein has not kept pace with the AOR benchmark.  December and January showed further decline or not in the direction we want to move.

As readers may recall, the owner of the Einstein needed to withdraw money for educational purposes and those withdrawals occurred during a bull market.

Einstein Risk Ratios

Two bright spots in the risk data are:

1. The slope of the Jensen Performance Index is positive.  This risk measurement is frequently called the Jensen Alpha.
2. The January 2025 values are much better than the January 2024 values.

Once more, the 2025 goal for the ITA portfolios I track is to reduce transactions to reduce the tax burden.  A second goal is to move portfolios toward greater simplification.