⚖️ 3. Asset Allocation & Operation Strategy (Core & Satellite)
The '60:40 Portfolio' or the 'Bogleheads 3-Fund Portfolio', often considered textbooks of asset allocation theory, are excellent starting points. However, to reflect the market's inherent inertia (momentum) and the value of narratives, I use a modified version of the traditional approach: the 'Core Planets & Peripheral Satellites (Core & Satellite)' strategy.
The strategy uses the universe and slingshot effect as metaphors for managing a diversified core together with a limited satellite allocation.
Design status and limits
This article is my core-satellite operating record, informed by the Bogleheads principles of diversification and simplicity. The weights shown are not universally optimal, and satellite assets can create larger losses and tracking error. Buy rebalancing only changes weights meaningfully when new cash is large enough; a substantial drift may not be corrected without sales.
🏗️ 1. Geopolitical Design and Diversification of the Portfolio
Going beyond simply dividing stocks and bonds into mechanical ratios, I construct the portfolio by clearly separating the characteristics and geographical advantages of the assets.
- Overwhelming Industrial Portfolio (US Stocks): The US market (VOO, SPMO, SCHD, etc.), which has the world's richest and most diversified industrial portfolio, serves as the pillar of growth.
- High Understanding and Information Advantage (Korean Stocks): Instead of mechanically including 'Non-US' regions just for diversification, I selectively incorporate the Korean market, where I can most intuitively understand the industrial flows and narratives having grown up there.
- Buffer Zone for Defense and Balance (US Long/Short-term Bonds): TLT, EDV (long-term bonds), and short-term bonds are not merely waiting places for cash, but are incorporated as 'Core assets with different characteristics'. When a crisis hits the stock market, they move in the opposite orbit and balance the overall center of gravity of the portfolio.
💡 My Actual Allocation Ratio (The 1:1:1 Rule)
To the question readers might be most curious about, "So, at what exact percentage (%) ratio do you divide and buy?", my answer is "I don't care about exact percentage ratios."
- Multiple Stocks and Frequent Fluctuations: Since I hold a wide variety of stocks and stock prices fluctuate daily, trying to force an exact target percentage like 60:40 is meaningless and a source of stress.
- The Only Dividing Line (Core vs Satellite): I have only one criterion for allocation: "Do I consistently buy without ever stopping under any circumstances? (Core)" or "Can I temporarily pause buying or take profit depending on the situation? (Satellite)"
- 1:1:1 Allocation: If I have to specify a macroscopic ratio, I aim for a broad framework of US Stocks : Korean Stocks : Safe Assets (Bonds, etc.) = 1 : 1 : 1 as I accumulate.
- A Snowball Started with Small Amounts: When I first built this system, I started with very small amounts of 5,000 KRW to 10,000 KRW per stock. This was because Toss Securities offered zero commission only for fractional purchases under $10 at the time. However, now that Toss Securities' automated investment commission has been revamped to be completely free regardless of the amount, I am comfortably increasing the investment amount and the number of stocks, massively growing the mass of the portfolio.
🚫 2. The Trap of Traditional Rebalancing and the Value of Momentum
Traditional rebalancing, commonly recommended in the market, is a mechanical ratio adjustment method of 'selling assets that have risen and buying assets that have fallen'. However, a dry observation of market history reveals that a fatal contradiction is repeated in this approach.
The market often forms strong momentum and narratives as it trends upward. A stock that breaks through its previous high and rises does so because it has the corresponding fundamentals and market support. Conversely, an asset whose price falls endlessly is often because its performance and competitiveness are declining.
In such situations, simply 'selling the best-running stock (the winner) to buy a stock whose fundamentals have been damaged and has become cheap (the loser)' just to meet a set ratio is one of the behaviors that must be most avoided in the capital market. In the market, this approach consistently leads to a result of eroding returns.
🔄 Alternative: Buy Rebalancing
Therefore, I do not hastily sell assets to balance the weight. Instead, I use a 'Buy Rebalancing' method that adjusts the 'purchase amount ratio' of newly injected capital every month or day. Assets that are growing well are left alone to fully enjoy the value of compounding and momentum, and assets whose weights have decreased are filled with new cash, thereby naturally correcting the orbit without going against the market's inertia.
🌌 3. Core Planets & Peripheral Satellites (Core & Satellite) Strategy
Based on this logic, I compare the portfolio to a cosmic system and design a structure that manages risk while exploring the possibility of excess returns.
🪐 Core Planets: Continuous Gravitational Field
- Targets: VOO, SPMO, SCHD(US stock) & KOSPI (KOR Stock) & Bond Core
- Role: They balance the center of the orbit with massive and heavy mass (capital). Planets with different gravities—growth and defense—intertwine, holding out so the portfolio doesn't become a space orphan even when the market shakes.
🛰️ Peripheral Satellites: High-speed Probes Executing Slingshots
- Targets: Individual stocks and themes whose growth potential I assess using momentum, operating results, and industry change. Because outcomes can differ from expectations, I keep them at a limited weight.
- Long-term Holding Principle: Individual stocks are also fundamentally placed in a long-term holding orbit to scale up the assets. By entering the gravitational pull of a specific trend (a passing celestial body), alpha returns (acceleration) are achieved in a short period.
☄️ The 'Growth Cycle' Where Acceleration Increases Mass, and Criteria for Selling
The 'energy of acceleration (profits)' obtained through satellite assets is not hastily sold. The only and dry criterion for executing a sale (escaping the slingshot) is: "Has the original investment idea and fundamentals for which this asset was incorporated disappeared?" The capital of a satellite sold because its reason has expired is absorbed (reinvested) back into the 'Core Planets', which are never to be sold, further strengthening the gravity of the entire solar system. If a satellite, once thought to be a short-term fad, grows into a structural mega-trend, it is not sold but evolved into a 'new planet'.