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← Back to List2026.07.04#EvolutionOfInvestment#FactorInvesting

Chapter 10. Evolution Continues: Building My 3-Core Survival Portfolio ​

Evolutionary 3-Core Portfolio

Introduction: The End of a 60-Year Financial History Exploration, Building My Survival Framework ​

From Chapter 0 to 9, I fiercely delved into the past 60 years of financial history to overcome the painful failures I experienced since first stepping into the stock market.

This long journey of Evolution of Investment wasn't simply to list the theories of Nobel laureates. It was a desperate survival story of gathering practical weapons to protect myself from my own irrational nature—foolishly greedy and easily paralyzed by fear.

Based on the three great weapons (VOO, SCHD, SPMO) I found in the previous chapter, I would like to introduce the portfolio I assembled after overcoming past failures. However, please do not misunderstand. This is by no means an "ultimate answer" applicable to everyone. It is merely the "evolutionary result up to now" tailored to my frail psychology and weaknesses as a human.

With this survival framework as a reference, I reveal my own 'Evolutionary Core' with the hope that you will find weapons suited to your own psychology and circumstances.

1. Breaking the Norm: The Massive Expansion of 'Core' ​

Countless finance textbooks and YouTubers repeat the same thing like parrots: "Keep only the S&P 500 (VOO) as your absolute core, and leave dividend ETFs or individual stocks as small satellites."

But having studied the long history of investments and rolled in the real battlefield, I could not agree with that statement at all. Because I painfully realized that for a human with emotions—not a robot—to survive in reality, VOO alone could never protect my mentality against the terror of market crashes and the greed of missing out.

The three fundamental principles that truly dominate the market are 'Market Beta', 'Value', and 'Momentum'. None of these three massive pillars deserve to be treated as mere satellites.

The key is not to blindly trust the 60/40 rule or the all-in S&P 500 strategy dictated by the world, but to broaden and fuse your own core with factors that can defend your psychological weaknesses. This is the current evolutionary state I have reached by fusing countless historical lessons and my own experiences: the 'Evolutionary Core'.

2. The Framework to Defend My Weaknesses: The Evolutionary Core ​

To protect my mentality, I distributed the roles as follows. If you can endure higher volatility than me, you might choose the Nasdaq (QQQ) as your core. If you prefer holding cash over dividends, you might use bonds as your shield. What matters is embedding your own philosophy.

① VOO (Market Core / Infinite Earth)

  • Philosophy: I thoroughly deny my shallow ability to predict the market.
  • Role: The massive upward canvas of American capitalism serves as the eternal baseline for everything at the center of my portfolio.

② SCHD (Value & Quality Core / Titanium Shield)

  • Philosophy: I pick up undervalued stocks (Value) thrown away by the panic-stricken masses.
  • Role: When the market bubble bursts and the world seems to collapse, it is an overwhelming defensive weapon that generates ignorantly robust cash flows, stopping the bleeding and protecting my mentality.

③ SPMO (Momentum Core / Spear of Greed)

  • Philosophy: When the masses are swept up in greed (FOMO), I don't act stubborn; I ride the law of inertia.
  • Role: When irrational madness dominates the market, it is a ruthless offensive weapon that mechanically drives returns vertically without trying to forcefully teach the market a lesson.

3. A Complementary Trinity: The Interaction of Earth, Shield, and Spear ​

These three cores I assembled are not simply a mix of three good stocks. They aim for an 'organic ecosystem' that interlocks and complements each other's weaknesses in the rough sea of the stock market.

If we simulate how this trinity operates and defends my mentality across three different market regimes, it looks like this:

📊 3-Core Simulation: Portfolio Interaction by Market Regime ​

Market RegimeVOO (Earth / Baseline)SCHD (Shield / Value)SPMO (Spear / Momentum)Mentality Defense & Synergy
📉 Market Downturn
(Rate hikes, Crises)		Drops with market averageRelative Strength (Defense)
Downside rigidity & Dividends		Drops due to broken trendsSCHD's steady cash flow acts as a buffer, comforting an anxious mentality and preventing panic selling.
🚀 Leading Stock Rally
(AI, Tech concentration)		Rises with market averageAlienated (Relative deprivation)Overwhelming Excess Return
Concentrated in leaders		When capital flocks to a few, SPMO rides the rally, blocking the investor's fear of missing out (FOMO).
➡️ Sideways Market
(Lack of direction)		Fluctuates in a narrow rangeSteadily accumulates dividendsFrequent losses due to broken momentumEven when both shield and spear lose power, the massive core VOO silently maintains balance, giving the patience to endure.

In this way, these three cores form a complementary engine tuned to my psychology, covering each other's shortcomings and maximizing their strengths.

💡 The Trap of Backtesting: Why Not Go All-In on SPMO? ​

When running backtests with tools like Portfolio Visualizer, everyone faces one question: "Looking at the equity curve, SPMO is overwhelmingly in first place. Shouldn't going 100% all-in on SPMO be the right answer?"

The numbers from the past might say so, but real-world investing is a battle of reality and psychology outside the backtest screen. The reasons I don't just hold the strongest spear (SPMO) but insist on mixing it with the earth (VOO) and shield (SCHD) are as follows:

  1. The Limit of Look-Ahead Bias: The past decade was a massive bull market centered around tech companies, which is why momentum (SPMO) performed so well. However, we cannot know if the next decade will be the era of value or momentum. We must lay VOO as the base and mix value and momentum to survive whatever era comes.
  2. MDD (Max Drawdown) and Mental Breakdown: As high as SPMO's returns are, its drawdowns (MDD) when trends break are equally deep. Seeing -40% on a screen is completely different from enduring huge amounts evaporating from your actual account. Without SCHD's downside defense, an ordinary investor will panic sell at the bottom.
  3. The 'Cash Flow' That Stops the Bleeding: SPMO and VOO have very low dividend yields. If the market moves sideways or downward for years without cash flow, investors mentally dry up. Even in a crash, the 3-4% dividend pouring out of SCHD is tactical ammunition that protects your mentality and allows you to buy more cheap stocks.
  4. Factor Rotation and Volatility Control: Value and momentum tend to ride opposite cycles. If you go all-in on one, you have to endure painful multi-year periods where your factor is alienated. Combining them makes the portfolio's volatility curve much smoother, giving you the strength (higher Sharpe ratio) to sustain your investment to the end.

4. The True Meaning of 'Satellite': The Mutation R&D Lab ​

I completed a massive core (planet), but it cannot be the entirety of the portfolio. Looking at the history of biological evolution, massive and stable species (Core) alone cannot perfectly adapt to environmental changes. Bizarre and dangerous 'mutations' must continuously occur for new, world-changing evolution to happen.

The 'Size' factor that I mentioned and set aside in Chapter 4 (Fama-French) is the core of this Satellite portfolio. VOO, SCHD, and SPMO are already massive, blue-chip dinosaurs. If you only hold them, you structurally miss out on the initial explosions of innovation in unknown territories like SpaceX's space exploration, quantum computers, or cryptocurrencies.

Therefore, the Satellite portfolio is not just a casino. It is a 'Future Mutation R&D Lab' where I dispatch a very tiny fraction (under 5%) of my capital into the unknown. 90% of these small mutations will fail, but the surviving 10% will change the world and eventually grow into a part of the massive planet (Core). Simultaneously, this dangerous playground acts as a perfect 'psychological pressure release valve' allowing the 'gambling instinct (inner monkey)' explored in Chapter 3 to run wild, ensuring I never mess with the heavy core.

Investing a very small portion in small mutations (Size factor) that do not fear bankruptcy ensures I do not miss out on the possibilities of future evolution. This harmonious interaction between a massive core and small, agile satellites is the current evolutionary state of my portfolio.

Now it's your turn. My 3-Core and satellite portfolio introduced so far are nothing but one of the many reference books for you. Discard the shallow answers or stock tickers given by others. I hope you will personally assemble and continuously evolve your own survival portfolio that will firmly protect you even in the face of market storms.

📚 [Evolution of Investment Series]

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