December 31, 2024

All investors face capital-market risk. Managing that risk, evaluating opportunities in the context of an investor’s goals, and assessing specific investments efficiently requires broad, objective, close-to-the-capital-market thinking. An asset allocation framework does not need to be a black box that processes statistical variables and then spits out an investment plan. It should be a logical framework that lays out choices for investors. The LJE Asset Allocation Process strives to accomplish these objectives. First, it summarizes in a logical and consistent way the investment choices recommended by our assessment of the coming economic environment. Second, we strive to provide in straightforward, plain English an explanation of our views and the rationale for the tilts to the portfolio. The LJE approach strives to make our forecasts logically consistent with each other and by construction, a weighted average of the forecasts’ individual forecasts adds up to the forecast of the next level index. Our outlook for the major economic drivers, guides the LJE asset allocation process. Parsimony in the presentation mandates that we focus on the major asset classes, which do not do justice to the flexibility of the framework. During the fourth quarter the benchmark declined 4.04% while the LJE Asset Allocation utilizing the ETFs lost 3.98%. The LJE tilt portfolio outperformed the benchmark by six basis points during the fourth quarter of 2024. For the year the benchmark gained 4.77%, while the LJE Asset Allocation utilizing the ETFs has appreciated 5.19%. Hence for the year the LJE allocation outperformed its benchmark by forty-two basis points.

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