Schrodinger Update Launching 2023: 2 January 2023

Putting 2022 to rest.

The above photo represents 2022 as we put it to rest, but not forgotten.  There are always lessons to be learned from troubled times.  This morning I am updating the Schrodinger as it is my “portfolio reference.”  Since the Schrodinger is a Robo Advisor account and managed by a computer, it is a portfolio used as a reference for other ITA portfolios.  As ITA readers, you can use it as your portfolio reference, assuming you make the comparisons over similar time periods.  The following data is strictly for 2022.

The Schrodinger is managed by Schwab and is referred to as an Intelligent Portfolio.  When compared with the other ITA portfolios, it tends to rank around the top 30%, which is quite respectable considering one does not need to do a thing other than save and deposit money in the account.  The Schrodinger was set up as an experiment for a family where one spouse asked the other – “Who will manage the family portfolio if you die?”  The Schrodinger is one answer.

Schrodinger Investment Quiver

With the addition of November and December dividends, a few more shares were added to the Schrodinger.  Below are the securities and the most recent number of shares held in the nine ETFs.

Schrodinger Performance Data

The following data represents 2022.  Note that the Schrodinger, while losing 12.1% of its value, still managed to outperform all the benchmarks I track.  It is particularly encouraging to see the portfolio best the S&P 500 (SPY).

In general, the Schrodinger should outperform SPY in down periods, but will most likely lag the same ETF in up markets.  The reason is that the Schrodinger is set up to handle risk better than SPY.  Fixed income will lose less money in down markets, but become a drag in up markets.

Schrodinger Risk Ratios

Checking out the Jensen Alpha we see that the Schrodinger did not handle risk all that well in 2022.  There has been a steady decline in this useful measurement of portfolio risk.

Don’t pay attention to January data (far right column) as I’m just setting the table up for the next review which will happen in a few weeks.