Pauling Portfolio Review: 29 September 2023

Manzanar: WWII Japanese Internment Camp

Pauling is a portfolio with an identical investment quiver as the Huygens or when the Huygens is purged of CEFs.  What is different between the two portfolios is the investing method where I am using the LRPC model with Huygens and the Buy-Hold-Sell (BHS) model with the Pauling.

For many months the Pauling is either the worst ITA portfolio performer or close to the bottom.  What readers now need to focus on is not the dismal IRR value, but rather the direction of the Jensen Performance Index.  Is the Jensen improving or in a state of decline?  That is the key question.

Pauling Security Recommendations

As with the Huygens, the Pauling will focus on growth.  I’ve set the investing model to BHS, selected four (4) as the number of assets to be recommended when updated, and the look-back period is set to the 60- and 100-trading days combination.

Currently, no equities are recommended for purchase.  The BHS model comes up with very different recommendations compared to the LRPC model.  Remember that the LRPC model recommended securing equity ETFs for the Huygens portfolio.

Pauling Manual Risk Adjustments

Since no equity ETFs are recommended for purchase there is nothing to be done this month.  Investors interested in protecting capital will set TSLOs somewhere between 5% and 8% below the current price for each of the current holdings.

Pauling Performance Data

Since 12/31/2021 the Pauling has lagged all possible benchmarks by a wide margin.  This poor performance is the major reason for making adjustments in the investment quiver.

Pauling Risk Ratios

In the opening paragraphs I mentioned that readers of this blog need to pay attention to the direction of the Jensen.  Note the improvement in this risk measurement since December of 2022.  By the end of the year there is a strong chance the slope of the Jensen will be positive.  If that happens this is a major turnaround for the Pauling.