Private Trader - The Umbrella

Let’s dive right in!

For many months leading into 2026, my intention was clear to increase defensive posture while ensuring no less than 30% of the portfolio remains in a cash state. As weeks have passed, many large-cap names have dropped significantly; surface-wise they look “attractive”, yet to me they have yet to enter zones worthy of allocation and patience here is not optional. Haste serves you not.

We’re operating in an environment filled with many unknowns and too many variables lack sufficient value; the inputs are not solid. Following them for the sake of continuity while turning a blind eye to structural reality only compounds one's hardship, and this is when the hat of observation must be worn.

My portfolio is currently focused on two objectives:

Realize profitable positions

Increase cash in preparation for controlled deployments weeks ahead

The “Umbrella”

Every equation, thesis, or hypothesis operates within a field of efficacy, think of it as an umbrella that protects you but only within a set coverage area; equations function the same way.

They’re effective only within a specific domain, and the complication is that this umbrella is not static. Its coverage area changes; it expands, contracts and shifts with regime, liquidity, and structure. If one does not continuously recalibrate this umbrella, errors surely intensify.

Errors here are two-fold:

External (market structure)

Internal (you)

The internal variable is the most dangerous because you’re the variable. As your thinking evolves, as confidence fluctuates, as bias creeps in, you drift away from the umbrella without realizing it; guilty I have been.

One must test boundaries, but those tests must be contained. Testing without containment becomes recklessness and losses then compound not because the equation failed, but because discipline did.

The equations deployed, some are rigid and do not change (usually these are core equations); while others are adaptive and some even hybrids. Why?

Because I’ve been operating since 2022 and there is still much I don’t know. Live experience, controlled live experience, is the highest form of data acquisition. Every lesson must return to the drawing board and every iteration must be logged.

Markets evolve. So must you.

To Buy or not?

Previously, I discussed the “do not touch” category, structural exclusions. These are equities that underperform under my equations consistently; not an opinion, yet outcome-based filtering.

An equation may function efficiently on Stock A and fail on Stock B. Overlaying the same logic onto both will not produce identical results and this is where umbrella calibration matters. You must test, with low portfolio weight. Your brain knows the difference between simulation and reality; give it reality, but give it constraints.

Over the years, I’ve avoided specific equities yet exceptions exist, but only under strict control. Allocation must be minimal, and exits for these exceptions must occur at profit; if not, the exception closes permanently.

We are not forcing equations onto markets, we’re identifying where they naturally generate value. Detect a pulse, then scale it.

Defensive State

As of today, I’m:

30% Cash

25% US Treasuries

45% Equities/ETFs

Since Q3 2025, defensive positioning has steadily increased, and I’ll continue to be in this state. The markets are foggy and my equations are generating wavelengths that stretch beyond their efficacy range. The umbrella’s coverage is unclear, and with visibility low, once must slow down. I’ve stumbled before and I’ve tested boundaries too aggressively.

Be defensive, tread carefully and rush not; peace out!