Interior of “Spruce Goose”
When a portfolio fails to meet expectations, changes are required. That is what readers can expect to see in this review of the Pauling and what is coming over the next few months. Classified as a Dual Momentum™ portfolio, the Pauling is currently holding down the #15 spot. Instead of investing in a single ETF at any given time, the Pauling will hold multiple securities based on recommendations from the Kipling spreadsheet.
Pauling Investment Quiver and Holdings
Below is the investment quiver and current holdings for the Pauling. Nearly 60% of the portfolio is in cash so there is plenty of opportunity to implement the recommendations readers will see in the second screenshots.
Pauling Security Recommendations
Using the LRPC investing model (purple arrow), the default look-back periods (red arrow) and a maximum of three securities at any given time (green arrow) the current recommendations are to invest in ESGV, VOO, and SPY. Check the fourth column from the left and you will see these three ETFs rank 1, 2, and 3 respectively.
Pauling Manual Risk Adjustments
The SD Multiplier is adjusted so the Stop Loss percentage for ESGV comes in at 8.0%. The maximum portfolio risk is 8.0% or a little higher than I prefer in these market conditions. I’m using conservative settings as I don’t expect to see much growth over the next few months.
Since the stocks in VTI overlap those found in ESGV, VOO, and SPY I’ll continue to hold those 25 shares. The plan is to build out ESGV, VOO, and SPY and then use the remaining cash to purchase as many shares of BIL as cash will permit.
Pauling Performance Data
The following performance or lack thereof is why changes are coming to the Pauling.
Pauling Risk Ratios
Over the next few months pay close attention to both the Jensen and Information values. Look for improvement in each as we move from month to month. The Jensen Performance Index improved since May, but the Information Ratio fell by a small amount.
When last reviewed the slope of the Jensen was -1.5 so -1.4 is a slight improvement. Short-term or risk-free interest rates rose for SHV placing downward pressure on the Jensen. If the FEDs can get inflation under control and interest rates decline, this will be a boost to the Jensen. I don’t expect to see much positive action for another six to nine months.
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