James Helliwell rebuilt an asset-allocation model with Claude AI that would have turned £1 into £28 since 2008, beating the S&P 500 while cutting drawdowns by two-thirds. The system adds an inflation filter that shifts into gold and TIPS when rates and inflation spike together.
Last weekend, I dusted off the old asset allocation model that I used to manage money with up until 2022, 2023, when I left and went into the media role. I didn't know how it had performed out of sample, so to speak. We had a massive amount of inflation and rate hikes, which meant that simultaneously bonds, the defensive haven, fell with stocks. We were going into a risk-off environment, or so we thought, where we would simultaneously have inflation and rate hikes, which is a really unusual combination because normally when the economy's slowing, there's no inflation. And the Fed certainly isn't hiking us into a recession. They do the opposite and cut. So that means that you can go into bonds and therefore you get some protection getting outta stocks. So you can see that rates, this is the 10-year government bond yield peaked in 1981, and for 40 years they fell until just after the pandemic where then we needed to unwind the stimulus. And tighten because we create a load of inflation. This is why ever since we've been in a completely different regime. So what comes next? There's a 60/40 ETF. I forget the name of it now. Let's have a look here. iShares 60/40 ETF. The industry didn't get the protection in bonds that all these models are built on. So what I developed coding it with Claude is to put an inflation filter within this. So that if inflation is high and if rates are high, then look to go into inflation-protected securities, whether it's gold or inflation-protected bonds. But this is what the model's doing. It's actively able to shift into the safest option. That's what's enabled me to come up with this. So starting at the worst possible time, right before the Great Financial Crisis, all the way through to date, it would've increased your initial investment 28 times. So that's a compound return of almost 20% compared to just 9% for the 60/40 portfolio and 11.5% for the S&P if you were to just buy and hold SPY or VTI. So vastly better performance with significantly less drawdown. To put this in perspective, 8, 16, 24, you're looking at more than 3 times the return with one-third of the drawdown. That's one of the models. So that is to come in this week's video. Have a look, Coca-Cola here. That's one of the things. And then I've just been updating my, I'll have to cover these, my screening model as well to find the best stocks. So I've been working on this today. I want to be able to release these to you all and be able to maintain those. And in order to do that, I'm going to have to have real-time data feeds. I'm going to have to probably hire someone to help me with that. It takes up a significant amount of time that I just don't have if I'm to keep up with making the videos, which of course I'm going to do. And I want to also be able to, as part of that service, be able to have maybe some live streams with you, but certainly group calls, coming up with ideas together, and hopefully be able to give you a better steer on things. For every client that I used to consult using the same bloody model that I've now recreated with AI to give you access to, so you've got the very bloody tools that I was using as a pro to manage millions and millions of pounds in this case, and dollars in case some other funds. My going rate, just to be completely transparent, as a retainer was 10 grand a month per client. I'm not in that world anymore. And this is far more fulfilling. I just got to ensure that it's sustainable. So I don't launch something that either runs me into the ground and detracts from me being able to otherwise create the videos and bring you guys that content on YouTube. And also, limits me from being able to get in the chat. Maybe there'll be a Discord or that kind of facility. I am going to charge for it relevant to the unit economics at the most affordable price point possible. I'm thinking probably two tiers, one that will be kind of like the light version if you are just wanting to do ETFs and manage it yourself and stick to your own thing. And then the full version, which will have access to me in real time, will be able to have those group calls, full range of analytics, looking at individual companies, how to manage your portfolios. So, uh, yeah, I thought I'd share what I've been up to. The important thing with 500 subscribers, it enables me also to be eligible with a bit more watch time for YouTube to grant me access to create memberships and segment a set of new videos from the main videos. So I can bring live streams and daily behind the scenes updates and what I'm working on, things like this, if you find them useful. But if you don't, then don't worry because The main videos will still be here. Let me flip you around here. I'll give you the balcony, the vista, the buena vista from Buenos Aires. I'll see you all back in Bali in a week's time. Adiós.
