Pauling Portfolio Review: 13 November 2025

Ginkgo Tree

Pauling is one of several portfolios recently converted to the Asset Allocation management model.  While the assets may vary slightly from portfolio to portfolio, the general management model is the same.  Select Exchange Traded Funds (ETFs) that represent different asset classes, set target percentages, and then follow the Kipling recommendations as to when to Buy or Hold.  To tilt toward passive management selling is rare, but employed when capital preservation is deemed essential.

Pauling Security Holdings

Below are the current holdings for the Pauling portfolio.  The column on the far right shows all asset classes with exception of short-term treasuries (SHV) are out of balance.  As readers will see in the next slide, only developed international equities (VEA) is recommended for purchase.

Pauling Rebalancing Recommendations

To preserve capital I have a 3.0% TSLO set for VOO, a 4.0% TSLO set for VO, and a 5.0% TSLO set for VB.  I want to hang on to mid- and small-cap stocks a little longer than large-cap equities as large or mega stocks are dominated by a few companies.  Based on the Shiller P/E ratio and the Buffett Indicator, the U.S. Equities market if over-bought by a wide margin.  It is only a matter of time before we see a correction.

This morning I added more shares of VEA and have limit orders to bring that asset class up to target.

Pauling Performance Data

Since 12/31/2021 the Pauling has lagged the AOR benchmark by a wide percentage.  Over the next year I will monitor the IRR, Jensen Alpha, and Information Ratio as each metric provides information as to how well the portfolio is performing.

Pauling Risk Ratios

The Asset Allocation (AA) model was launched around 3/1/2025 and since that time the Jensen Alpha has improved slightly while the Information Ratio has fallen behind.  What this means is that on an absolute scale the portfolio is lagging the benchmark since March, but is improving when risk is factored into the equation.  Part of the risk reduction is the high percentage held in the low volatile ETF, SHV.

Portfolio Construction: Where to Begin?