Portfolio Consolidation: The Discipline of Doing Less, Better

In crazy markets, you often have to simplify your operations in order to build something important. This is the pragmatic decision I made today.

February 5, 2026

Today, I’m writing to walk you through a significant operational decision: I’ve liquidated four of the five Cara R-88 portfolios and consolidated all capital into Portfolio #4, the Aerospace & Defense portfolio.

This wasn’t a panic move in response to this week’s market volatility. It was a deliberate choice, driven by a simple reality: my operational capacity. Managing 48 positions across five portfolios at once while introducing three new publications in one month taught me some hard lessons about bandwidth.

The Portfolio Numbers Tell the Story

• Portfolio #4 (Aerospace & Defense): Currently at $106,717 (and being restructured to 8 positions today).

• Combined 2026 Performance: +0.99% after absorbing the realized losses from the four liquidated portfolios.

• The Real Kicker: The time required to manage 48 positions properly is simply more than I have available right now.

Interestingly, the Small Cap portfolio (Portfolio #3) was actually performing well when I closed it — up +3.37% while holding 46% from the outset. It’s proof that another of my conviction builds was working. But that’s not the point I’m making today. The core issue here isn’t which portfolios were winning or losing—it’s my personal operational bandwidth.

Why Did I Start with Five Portfolios Anyway?

The five-portfolio setup was built to test a hypothesis with real money:

• Portfolios #1-2 (Cara 100, Dow 30): These were my “teaching” portfolios. They demonstrated conventional strategies like large-cap barbells, index replication, and diversification.

• Portfolios #3-4-5 (Small Cap, Defense, AI Infrastructure): These were my “conviction” builds, fueled by intensive research and thematic focus.

The thesis was simple: a fact-based, data-driven approach using proprietary scoring across 30+ global markets could outperform conventional benchmarks.

The data partly confirmed the thesis. Portfolios #3 and #4 consistently beat the teaching portfolios, while and #5 did not. The consolidated average of the three was a gain of +2.000%, which for one month under current circumstances is arguably outstanding.

But here’s the catch: proving a thesis and executing it under real-world constraints are two very different things.

A Key Lesson: Ziggma vs. INSTAT, Finally Clear

Building these portfolios, I made some tactical errors that only became clear once I was in the weeds with all 48 positions. I was under-influenced by technical momentum (INSTAT) when selecting some positions.

Let me break down the clarity I’ve gained:

• Ziggma (0-100) = Fundamental Quality. It’s a composite score of Growth, Valuation, Profitability, and Financial Health. This tells you if a stock deserves a spot on your watchlist based on its underlying strength.

• INSTAT (-100 to +100) = Technical Momentum. It measures price momentum and trend strength. This tells you whether to hold or sell a position based on its current market behavior.

The Refined (and Simpler) Methodology

For Entering a Position:

• INSTAT must be ≥ 50 (technical momentum confirms).

• Ziggma must be ≥ 60 (solid fundamentals).

• While both conditions are non-negotiable, INSTAT is the more important in the short-term.

For Managing a Position:

• If INSTAT drops below -25: Exit immediately. No questions asked, no matter how good the fundamentals look.

• If INSTAT is between -15 and 0: Monitor daily with a defined exit trigger ready.

• If Ziggma falls below 40 while INSTAT is negative: Exit within a week.

The golden rule? When INSTAT deteriorates materially (below -25), you exit. Period. I violated this rule multiple times in all five portfolios because I was spread too thin to monitor scores daily. Today, I’m correcting those mistakes.

So, Why Consolidate Right Now?

The immediate trigger is straightforward: I don’t have enough time to give 48 positions the attention they need.

Here’s what’s been eating up my operational capacity all at once:

1. Launching three new publications in addition to the 600-page Weekly Navigator: INSTAT Market Pulse, Playbook, and Portfolio for paid subscribers.

2. Data structure migrations that consume hours daily to optimize workflows.

3. Prompt engineering across publications to refine AI-assisted reports to my standards.

4. Platform evaluation, testing AI tools, mostly chatGPT, Grok, Gemini, Perplexity, and Claude for different tasks.

5. Workflow optimization, including Power Query development and now testing Claude Cowork for automation.

6. Fighting sophisticated spam, including phishing emails pretending to be from Substack’s CEO (yes, I escalated it directly to their leadership).

In volatile markets, 48 positions demand daily score checks, disciplined rebalancing, and systematic risk management. I simply don’t have the bandwidth to do that properly across five portfolios while also launching new publications and fighting spam wars. My 30%+ cash position heading into this volatility wasn’t just a market defense—it was an operational necessity.

The Consolidation Decision, Plain and Simple

I could have kept both Portfolio #4 (Defense) and #3 (Small Cap)—they were both working. But the operational truth is this: one portfolio with 8 well-researched, actively monitored positions is far better than two portfolios with 24 positions I can’t manage properly. Five portfolios with 48 positions at this time was simply out of the question.

This isn’t about market pessimism — although that’s also a concern. This decision I just made is about operational discipline.

Today’s Action: Cutting the Weak Links

I will now explain the situation briefly compared to the detail in the Portfolio Assessment Report #5 sent to paid subscribers.

I’m selling three positions from Portfolio #4 with INSTAT scores below -25:

1. StandardAero (SARO) - INSTAT: -32 (despite a strong Ziggma of 92)

2. Heico Corp (HEI) - INSTAT: -33 (Ziggma 46, weak on both fronts)

3. BWX Technologies (BWXT) - INSTAT: -28 (Ziggma 35, the weakest position)

These sales free up about $18,400. Combined with existing cash of $23,737, the portfolio will hold roughly $42,000 in cash (39.5%) after today.

The eight positions I’m keeping all have INSTAT scores above -15. Five of them show INSTAT ≥ 67, indicating strong positive momentum. Two (Curtiss-Wright at -4 and RTX at -12) are marginally negative and will be monitored daily, with clear exit triggers if they weaken further.

A Closer Look: Why These Three Had to Go

• StandardAero (SARO): The Momentum Trap. Exceptional fundamentals (Ziggma 92) but collapsing momentum (INSTAT -32). I bought it on a technical spike (INSTAT was 100 on Jan 23) without confirming sustained strength. The lesson: Great fundamentals aren’t enough if technical momentum falls off a cliff. The latter happens when with the present administration in Washington, it’s war one day, peace talks the next, and on and on.

• Heico Corp (HEI): Weak All Around. Mediocre fundamentals (Ziggma 46) and terrible technicals (INSTAT -33). The lesson: Don’t rationalize holding a position that fails both tests.

• BWX Technologies (BWXT): Thematic Hope vs. Data Reality. Weak fundamentals (Ziggma 35) and deeply negative technicals (INSTAT -28). This was a bet on future nuclear propulsion contracts. The lesson: A thematic hunch without fundamental or technical support is speculation, not investing.

The Keepers: My Eight-Position Core

After restructuring, here’s what remains:

Strong Positions (INSTAT ≥ 67):

1. Woodward Inc (WWD) - Ziggma 62, INSTAT 100 | +23% unrealized gain

2. Textron (TXT) - Ziggma 54, INSTAT 100

3. Northrop Grumman (NOC) - Ziggma 50, INSTAT 100 | +21% unrealized gain

4. L3Harris (LHX) - Ziggma 54, INSTAT 71 | +15% unrealized gain

5. Howmet Aerospace (HWM) - Ziggma 80, INSTAT 67 | Strong on both fronts

Core Holdings with Exceptional Fundamentals:

1. GE Aerospace (GE) - Ziggma 95, INSTAT 3 | Keeping for its outstanding fundamental strength, despite neutral momentum.

Monitored Holdings (Marginal Technical Weakness):

1. Curtiss-Wright (CW) - Ziggma 47, INSTAT -4 | Daily monitoring; exit if INSTAT < -15

2. RTX Corp (RTX) - Ziggma 62, INSTAT -12 | Daily monitoring; exit if INSTAT < -20

Post-Restructuring Snapshot:

• Average INSTAT: 57.9 (a massive jump from 34.6)

• Positions with positive INSTAT: 6 out of 8 (75%)

• Cash Position: 39.5% (dry powder for new opportunities)

Transparency and Discipline: No Sugarcoating

Many portfolio managers would rationalize holding losing positions “until they come back” or hide behind vague terms like “rebalancing.” I won’t do that.

I made tactical errors. I over-weighted technical momentum in some selections, and I held positions with deteriorating scores too long because I was stretched too thin. So, I’m cutting losses, consolidating capital, and refocusing. This is what institutional discipline requires:

• Test hypotheses with real data.

• Measure results objectively.

• Act on what the data shows.

• Don’t let ego stop you from correcting course.

The five-portfolio experiment validated my core thesis: systematic, conviction-based builds can outperform. Now, I’m executing that thesis with the operational discipline that current markets and my bandwidth demand.

What All Paid Subscribers Can Expect Moving Forward

In the Next 2-4 Weeks:

• Weekly Navigator & INSTAT Market Pulse will continue at their current high standards.

• Portfolio Assessment Reports will focus solely on the 8-position Aerospace & Defense portfolio, resuming weekly on February 12.

• Playbook will resume once my workflows stabilize.

Within 2-4 Weeks, My Goal Is:

• All four publications operating at the quality standards I’ve maintained for over 50 years.

• The consolidated portfolio receiving proper daily monitoring with clear exit rules.

• Workflow automation (via Claude Cowork) cutting manual data work from hours to minutes.

• My focus fully returned to analysis, not infrastructure.

My Quality Promises to the Portfolio Subscribers:

• Transparency: I’ll keep documenting decisions, scores, and rationale in real time.

• Quality over Quantity: One well-managed portfolio beats five neglected ones.

• Operational Excellence: All publications will meet my professional standards.

• Daily Monitoring: The Defense portfolio will get the attention it deserves.

The Bottom Line

Today’s consolidation is about:

• Operational Realism: Acknowledging my bandwidth limits, especially in volatile times.

• Methodological Clarity: Sharpening how Ziggma and INSTAT work together.

• Disciplined Portfolio Focus and Execution: Concentrating capital where my research shows the clearest edge. Exiting positions when scores break the rules.

Within 2-4 weeks, with optimized workflows in place, all four publications—and all five portfolios—will be operating at full capacity. The Aerospace & Defense portfolio will get daily, systematic monitoring.

This is what 50+ years of market experience looks like: recognize when you’re overextended, act decisively to correct it, and refocus on what you do best.

It’s noon; now back to INSTAT A (Europe & Asia).