Wild Hare Saloon – Canby, OR
“The stock market is a device to transfer money from the impatient to the patient.” – Warren Buffett
Huygens is another asset allocation portfolio that has been using this well-known investment model for a little less than one year. The portfolio is set up to generate nearly three percent in income and that money is used to purchase more shares of asset classes most below target.
Since the last review I made a few changes in the asset allocation percentage. The changes were made to lower the portfolio risk and this should show up in the Jensen Performance Index over the next few months.
Huygens Security Holdings
The small-cap equity (VB) is most out of balance. Since it is above target I plan to let it ride and concentrate available cash on those asset classes most below target. VOO, another equity holding, is far below target and a limit order is in place to purchase shares. Price changes will cause asset classes to move away from target so we end up purchasing asset classes when they are below target or when prices decline in a specific asset class. This is classic dollar-cost-averaging.
While this is a deferred tax account, I am managing it as if it were a taxable account and that is one reason for letting VB run. If VB were move to something close to 10% above target I would likely sell and take the profits. That is unlikely to happen.
Huygens Rebalancing Recommendations
The purple arrow points to the number of shares for which there are limit orders. With a portfolio this size the goal is to keep each asset class within one percentage point of the target percentage.
Huygens Performance Data
Since 12/31/2021 the Huygens has outperformed the AOR benchmark by one percentage point annualized. All other possible benchmarks have performed well above the Huygens. The last few years have been an equities driven market as shown by the S&P 500 ETF, SPY. This is exactly why the Copernicus portfolio has performed so well.
Huygens Risk Ratios
When risk is factored into the equation, how well is the Huygens performing? Since the move to the asset allocation model the Huygens has improved. Check the Information Ratio for this information.
While the Jensen is not near its high point over the past year, the slope is in the right direction. Also encouraging is to see improvement over this past month.
Comments and questions are always welcome.
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Keeping with the quote about the stock market being a mechanism for transferring money from the impatient to the patient, this recent Forbes article about recent remarks by Black Swan Author Nassin Taleb seems applicable, here’s the link:
https://fortune.com/2025/02/02/black-swan-author-nassim-selloff-stock-market-crash-outlook-deepseek-shock-fragile-economy/
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