Rutherford-Darwin Portfolio Review: 9 May 2025

Tenerife, Canary Islands

It was a quieter week in the US equity markets with the SPX closing slightly lower (~-0.4%) than last week’s close:

and this still leaves us sitting just below resistance at ~5780 with no clear indication of which direction we might see a breakout (to the upside or downside) of this sideways consolidation.

Relative to other major asset classes this placed US equities closer to the bottom of the list rather than the top:

with Crypto and Commodities leading the way.

The Rutherford-Darwin portfolio handled the situation relatively well with the diversified Darwin “Buy and Hold” portion picking up a bit of ground:

and the Rutherford Option portion taking profits in a bullish position (Long Call Vertical Spread) in Silver, a bearish position (Short Call Vertical Spread) in Oil (USO) and a bullish position (Short Put Vertical Spread) in Crypto (IBIT). The bearish position in USO was replaced by a new Bear Call Vertical Spread at the 69(-10)/70(+10) strikes expiring 20 June – otherwise, no addition Option positions are presently held in the portfolio as I work on restructuring the portfolio.

The overall picture of portfolio performance to date looks like this:

with steady progress over the past 3 weeks as I moved to a more conservative hedging strategy with the Option portion of the portfolio.

Going forward I am working on changing the allocation of funds between the various portions of the portfolio to more evenly balance the portfolio while still maintaining acceptable volatility. Volatility of the current portfolio, since inception, is presently 12.67% (annualized) and it would be nice to keep it at this level, or maybe slightly higher, going forward. The volatility targeting strategy used in the Darwin portion of the portfolio has worked very well over a difficult period of extreme market volatility – with a volatility of 15.3% – so I will probably stay with this approach whilst increasing the allocation of funds to this portion of the portfolio. I will then stick with using Options to hedge the portfolio rather than being more agressive and trying to beat the performance of the “Buy-and-Hold” portions. To date I have not adjusted position sizes in the Darwin portion of the portfolio but doing so would have resulted in less exposure to the market and lower volatility. The (trading) cost of making these adjustments in a 9-asset $10k portfolio did not seem to be worth the effort but, with larger holdings, it may well be worth it. I am still working on the Plan and will post when I am closer to finalizing it. I will not play around too much with the asset classes although I may use SPLG or similar ETF to represent US equities simply based on the magnitude of share pricing. I am still also undecided as whether to stick with Silver (SLV) to represent commodity metals or move back to Gold (GLD). Also, whether to stick with the 3x leveraged TMF Fund for Treasuries or to move back to the unleveraged TLT – but, generally, no really significant changes to the asset makeup of the portfolio that seems well “diversified”.