Disclaimer: This is my personal learning log and decision framework. Nothing here is financial advice.
Style: long-term (months to years), no leverage, low-frequency execution.

1. Scope & Objectives

Time horizon: months to years
Primary objective: sustainable long-term compounding with explainable decisions
Secondary objective: keep investing in the background (study/life first)

2. Non-Negotiables

  • No leverage
  • No high-frequency trading
  • Do not change long-term structure due to short-term volatility
  • Avoid complexity for the sake of being “smart”
  • Default to low action when evidence is weak

3. Portfolio Architecture

3.1 Core ETFs = Market Tracking (Beta Engine)

The core sleeve is designed to follow broad markets with low friction. This is the default compounding engine.

Typical instruments:

  • VOO / RSP (US large-cap / S&P 500 exposure with different weighting)
  • VEU (ex-US equity exposure)
  • SCHG (growth tilt)

3.2 Individual Stocks = Defense + Opportunities (Satellite Sleeve)

Stocks are not for market tracking. They serve two roles:

  1. Defense
    Resilient businesses meant to stabilize the portfolio under stress
    (defensive ≠ no drawdown; the real defense is sizing + emotional distance).

  2. Opportunities
    Small, controlled bets on clear mispricing or structural themes.

Default filter (to avoid randomness):

  • Prefer high-quality, well-covered mega-caps temporarily weak / range-bound
    over obscure small caps, unless I can articulate a real edge.

3.3 Gold + Cash = Risk Tools

  • Gold: diversifier / hedge (can be volatile in the short run)
  • Cash: optionality + psychological safety; allows patient deployment

4. Allocation Bands (targets, not fixed weights)

I manage allocation by bands rather than exact weights.

  • Core ETFs (Market): 35–60%
  • Stocks (Defense + Opportunities): 20–50%
  • Gold: 8–15%
  • Cash: 5–30%

Important: Bands are not meant to hit upper bounds simultaneously.
Priority rule: keep the Core healthy; correct drift mainly via cash flows.

Neutral baseline (informal):

  • Core ~50%, Stocks ~40%, Gold ~10%, Cash 0–20% (can go higher temporarily after deposits)

Band violation protocol:

  • If bands are violated through passive drift (price moves): correct via cash flows; no urgency.
  • If bands are violated through active rotation: the rotation must meet the conditions in Section 6.5. If not, it is a process failure — review in the next monthly review.
  • The bands are guardrails, not prison walls. A thoughtful, written exception is allowed; an impulsive breach is not.

5. Decision Protocol (before any action)

Before any buy/sell/add/reduce decision:

  1. Mirror intent: structural allocation or emotional reaction?
  2. New information check: did the thesis change, or is it just volatility/noise?
  3. Default action: if evidence is weak → no action or tiny adjustment using new cash only

AI rule (tool, not leader):

  • AI may help research, but it cannot define risk boundaries.
  • If I cannot state my cushion (price + sizing + liquidity + falsification) in one sentence, default to smaller size or no action.

6. Rebalancing Rules (low action by default)

6.1 Primary method: rebalance via new cash

  • Prefer fixing drift by directing new contributions into the underweight sleeve.
  • Avoid forced selling unless structure is meaningfully broken.

6.2 Triggers

  • If Stocks > 50%:
    stop adding to stocks; direct new buys to Core ETFs until back in range.
  • If Core ETFs < 35%:
    new buys go to the Core by default (staged entries).
  • If Cash > 30%:
    deploy gradually into Core ETFs unless a clearly defined opportunity exists.
  • If Gold > 15%:
    prefer correcting via cash flows; trim only if necessary to restore structure.

6.3 Execution style

  • Prefer 3-step entries over all-in timing:
    • Step 1: starter position
    • Step 2: add if thesis holds and price improves / risk improves
    • Step 3: complete only if evidence strengthens
  • Avoid “revenge trades” after losses.
  • Minimum gap between steps: 5 trading days. Same-day or next-day adds count as the same step for discipline purposes.

6.4 Cooling-off rule after large deposits (hard rule)

After any large deposit:

  • write the plan first, then deploy
  • default first buys go to Core ETFs
  • any stock entries must be staged (3 steps) and must fit allocation bands

6.5 Valuation-based rotation (conditional, not default)

Selling Core ETFs to fund stock purchases is allowed only when all five conditions are met:

  1. Written justification with a specific valuation metric (e.g., “SPX PE ~29x, well above 20-year avg of ~16x”).
  2. Named destination with a clear risk/reward case at current prices.
  3. Minimum Core floor: at least one core ETF must remain ≥10% weight.
  4. Gradual execution: spread over at least 2–3 weeks.
  5. Sector check: destination must not push any single sector above 25%.

Without all five conditions, the default remains: use new cash only.

Related lesson: Rotation is valid — magnitude is the risk

6.6 Sector concentration cap

No more than 25% of the portfolio in a single GICS sector. Before adding to any position, check total sector exposure:

  • If a sector exceeds 25% through passive drift, correct via cash flows.
  • If a sector exceeds 25% through active buying, stop immediately.

7. Exception Clause (allowed, but controlled)

I may break a default rule only if:

  • the action is small (does not alter overall structure),
  • the reason is written in 1–2 sentences:
    • “What hypothesis am I betting on?”
    • “If I’m wrong, how will I exit (time/price/size)?”
  • exceptions are reviewed in the next monthly review.

8. Review Cadence (and attention budget)

  • Log: short entries written close to the decision (3–10 minutes)
  • Monthly review: once per month, focusing on:
    • structure drift (Core / Stocks / Gold / Cash)
    • whether any thesis actually changed
    • whether investing is consuming too much attention
  • Lessons: if a mistake repeats twice, convert it into an explicit rule

Attention budget (hard constraint):

  • Daily: 15–25 minutes max (check + log + orders)
  • Weekly: one deep block (60–90 minutes) for reading + thesis maintenance
  • If math/study suffers → reduce investing frequency, not “try harder”.

Snapshots live in the Log, not the Playbook.

9. Change Log (Playbook edits)

  • 2026-01-30: initial version; defined Core ETFs as market tracking, stocks as defense/opportunities; established allocation bands and rebalancing rules.
  • 2026-01-30 (v1.1): removed baseline snapshots from Playbook (moved to Log); added deposit cooling-off rule, AI tool constraint, and attention budget.
  • 2026-02-28 (v1.2): Added valuation-based rotation clause (6.5), time-staged minimum gap (6.3), sector concentration cap (6.6), and band violation protocol (4). Driven by February valuation rotation and SPGI entry speed.