Millikan Asset Allocation Portfolio: 6 May 2026

Plant Shopping

Millikan is the asset allocation portfolio up for review this morning and it is undergoing a few changes.  The new allocation of assets is designed to further diversify the portfolio, provide additional resistance to a possible recession, and to counter the high probability of financial repression.  Read the blogs on Financial Repression (FR) and look up YouTube videos on the theme if you need more information.  The U.S. government is poised to use FR to inflate out of a mountain of debt as our weak congress is without a spine to attack the problem by other means.

Millikan Security Holdings

Most of the asset classes, represented by different Exchange Traded Funds (ETFs), are under target.  Explanation as to why this will continue is explained later.

The Millikan holds dividend paying securities, international equities, emerging markets, commodities, gold, and sectors that contain stocks providing goods and services consumers need despite the behavior of the overall economy.  For example, Staples include companies that produce food, soap, toothpaste, etc.  Items consumers will hold as high priority items.

Healthcare is another vital sector.  Despite our messed up medical insurance system, medical care will be provided.

Millikan Rebalancing Recommendations

As you look at the following table note the high percentage held in SCHO.  Were I to rebalance the portfolio I would sell shares of SCHO and use that cash to build up other ETFs.  However, the current U.S. stock market is overbought or overvalued.  Based on the Shiller CAPE ratio and Buffett Indicator, our market is peaking and is likely to correct sometime over the next year.  Therefore, I am “keeping powder dry” and waiting for better buying opportunities.  Rebalancing the portfolio can wait.  As dividends become available I will nibble at a few undervalued asset classes, but hold off on major rebalancing of the portfolio.

It is difficult to be patient when the market continues to move up.  I could be wrong about the market direction.  Young folks should stay invested, but this portfolio belongs to retiree who needs capital preservation.  Thus the cautious move to stay heavily invested in short-term treasuries and wait for some sort of market correction.

Millikan Performance Data

Since 12/31/2021 the Millikan has outperformed the AOR benchmark, but lags broad based benchmarks such as VT, VTI and SPY or the S&P 500.  Holding short-term treasuries is a drag on portfolio performance.

Millikan Risk Ratios

The risk ratio data is mixed.  The Millikan has gained in value as shown by the Sortino Ratio.  With a very low portfolio beta value of 0.317 the Treynor Ratio is up.

The Jensen Alpha and Information Ratio are trending down which indicates the portfolio is not keeping pace with the benchmark.  The reason is obvious.  The Millikan is holding low volatile securities and this penalizes the portfolio when the market is moving up.  Let the worm turn and the Millikan will perform better in a down market.  I am waiting for a buying opportunity to show up before too many months pass.

Financial Repression: Part IV