![\"Kepler](\"https:\/\/itawealth.com\/wp-content\/uploads\/2025\/12\/Santa-10-Spanial.jpg\" "\\"Kepler")
<\/p>\nReady to greet Santa.<\/em><\/p>\n<\/div>\n Kepler is the portfolio up for review this morning.\u00a0 Major asset allocation changes are coming to the Kepler for two reasons.\u00a0 1) The portfolio has been a poor performer.\u00a0 Therefore adjustments are appropriate\u00a0 2) The new asset allocation model is designed to be somewhat recession resistant.\u00a0 I say \u201csomewhat\u201d as I don\u2019t think there is going to be any full-proof place to hide in 2026 unless one is willing to short the market.\u00a0 Shorting the market is not the best idea as historically the market trends upward and it is extremely difficult, if not impossible, to time the market.\u00a0 One needs to be correct twice. When to get out and when to get back in.\u00a0 That second call, when to get back in, is the more difficult one from a psychological position.\u00a0 When the market hits bottom or close to it, investors are reluctant to buy stocks as the thought is \u2013 the market is going to go lower.<\/p>\n With the Kepler I am going with a wide diversification concentrating more of the portfolio using treasuries such as IEF, TLT, and SHV.\u00a0 In addition I sold all shares of VOO as this S&P 500 Exchange Traded Fund (ETF) had too much exposure to the overvalued Artificial Intelligent dominated stocks.\u00a0 In place of VOO I am using RSP, also oriented to S&P 500 stocks, but an equal-weight ETF.\u00a0 Stocks in RSP are give equal-weight whereas stocks in VOO are cap-weighted.<\/p>\n Kepler Asset Allocation Model<\/strong><\/p>\n Below is the current makeup of the Kepler portfolio.\u00a0 Yes, there are overlapping ETFs such as VYM and SCHD.\u00a0 I\u2019m not too worried about such conditions as the recommended percentages are not that high to either ETF.<\/p>\n Three sector ETFs are included and they are:\u00a0 Utilities (VPU), Healthcare (VHT), and Consumer Staples (VDC).\u00a0 All three ETFs provide products and services needed during recessions and depressions so it makes sense to hold them in this market protection environment.<\/p>\n Readers will note the projected yield is close to 3.0%.\u00a0 Future dividends will generate cash to help keep the portfolio in balance.<\/p>\n Also included in the following asset allocation is exposure to developed international equities (VEA) and emerging markets (VWO).\u00a0 If U.S. Equities stumbles, we have some hope the markets elsewhere on the globe will prosper.\u00a0 One reason for this logic is that the G7 no longer dominates global Gross Domestic Product (GDP).\u00a0 BRICS is now the dominate economic engine of the world.<\/p>\n Definition of BRICS:<\/strong>\u00a0 \u201cThe BRICS economic alliance is a bloc of major emerging economies (Brazil, Russia, India, China, South Africa, plus newer members like Iran, Egypt, UAE) aiming to increase cooperation, boost South-Global influence in global governance, and challenge Western economic dominance by promoting trade, investment, and alternative financial systems, including creating institutions like the New Development Bank<\/mark>. It functions as a platform for political coordination and economic partnership, advocating for a multipolar world order.\u201d<\/span><\/p>\n Kepler Rebalancing Recommendations<\/strong><\/p>\n How does rebalancing the Kepler portfolio work?\u00a0 The following worksheet comes out of the Kipling spreadsheet.\u00a0 The goal is to keep each ETF with a Buy designation within one percentage point (1.0%) of the target percentage.\u00a0 If cash is needed, I sell shares of SHV to raise the needed cash.\u00a0 I sold shares of SHV this morning in order to bring all ETFs with a Buy recommendation into balance.\u00a0 Note the Out of Balance column or the third one from the right.<\/p>\n ETFs with a Hold or Sell recommend are not touched.\u00a0 One of the overarching goals for 2026 is to reduce portfolio churning in order to reduce taxes.\u00a0 Minimizing transactions should also help performance as well as reduce taxes.<\/p>\n Kepler Performance Data<\/strong><\/p>\n Now we come to the disappointing news.\u00a0 Since 12\/31\/2021 (launch date) the Kepler lags the AOR benchmark by a wide margin.\u00a0 With 53% of the portfolio in Fixed Income, this is a very conservative portfolio.<\/p>\n BTW, I think the IRR values for VT is an error that I just noticed.<\/p>\n Kepler Risk Ratios<\/strong><\/p>\n How is the Kepler performing when risk is taken into account?\u00a0 The Jensen Alpha is the most important of the four risk measurements and it continues to hang in the -4% region.\u00a0 Not good as the Jensen should be positive.\u00a0 Based on the slope, Jensen has been trending down all year.\u00a0 The hope is that the new asset allocation will turn this performance around.<\/p>\n If managing an asset allocation portfolio such as the Kepler is too difficult, then seriously consider setting up an Intelligent Portfolio with Schwab.\u00a0 The Schrodinger is such a portfolio.\u00a0 Below is a link to the Schrodinger.\u00a0 There are many blog posts laying out how the Schrodinger works.\u00a0 Once this style of portfolio is set up, one does nothing except add new money.\u00a0 The owner of the Schrodinger deposits new cash into the portfolio on a regular basis and when the cash reaches a certain level, Schwab\u2019s computers reinvest the cash.\u00a0 The computer model goes into action and re-balances the portfolio.\u00a0 The owner of the portfolio does nothing.\u00a0 This is truly a passive style of investing and works for those who have no investing knowledge.<\/p>\n Schrodinger Robo Advisor Portfolio Review: 26 November 2025<\/a><\/p>\n<\/blockquote>\n![\"Kepler](\"https:\/\/itawealth.com\/wp-content\/uploads\/2025\/12\/1-9.jpg\" "\\"Kepler")
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