Gauss Portfolio Review: 25 June 2026

Old School House

Gauss is the asset allocation portfolio up for review.  Few changes are taking place with the U.S. Equities market this high and the overall concern of an overvalued market based on the Shiller PE ratio as well as the Buffett Indicator hovering in “nose bleed” territory.

The following analysis explains how I am handling the portfolio going forward.

Gauss Asset Allocation Model

As readers can see, most of the asset classes are out of balance to the low side of the target percentage.  SCHO and SHV are short-term treasuries and both are well above target.  Rather than sell either to these ETFs and place limit orders on various ETFs, I am waiting for better buying opportunities.  In the meantime SHV and SCHO will generate interest dollars.

Gauss Rebalancing Recommendations

As dividends come in from the second quarter, I plan to rebuild the asset class (ETF) most below target.  That ETF is SPLV.  I have a limit order to purchase one share as that is all the cash available.  Second quarter dividends should provide more cash to purchase more shares of SPLV.  If nothing changes the next ETFs to add to are JEPI, SCHD and VNQ.

If we experience a major market correction I will sell shares of SHV and use the cash to bring all ETFs within 5% of target.  The next move is to then bring all ETFs to within 4% of target and each month or so to gradually bring each asset class closer to the target percentage.

Gauss Performance Data

Since 12/31/2021 the Gauss has outperformed several benchmarks, but cannot quite match the S&P 500 (SPY).

Gauss Risk Ratios

Based on the risk I am taking with the Gauss, this portfolio is performing very well.  The Jensen Alpha is a very high 5.28 value and the Sortino Ratio matches the high for the past year.  The slope of the Jensen is positive and the goal is to keep this growing.

The Information Ratio is the clearest indicator as to how the portfolio is performing compared to the AOR benchmark.  We see the portfolio has been loosing ground over the past year.  This is due to taking a conservative approach to managing the portfolio.  AI is the big question going forward as can easily drive the market either up or down.  AI is being compared to the industrial revolution and is likely to be even more important than the development of the Internet.  One major question remains and that is – Will AI generate sufficient income to offset the huge investments?  Will the bubble burst?

Share this URL with friends and family.

Financial Repression Portfolio from ChatGPT

Portfolio Diversification: 6 June 2026