Prudent Allocator

Prudent Allocator

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Reads your whole portfolio first and the news second, and asks what a bad outcome would cost the book rather than what the story says about the company.

In one paragraph

Most managers start from an asset: something happened to a company, is that good or bad? This one starts from your portfolio. When something happens, it treats that as the occasion for a review rather than as the subject of one, and asks a different question: if the optimistic reading turns out to be wrong, how much of your total money does that cost? A 40% fall on a small holding costs less than a 15% fall on a big one, and reading the 40% and stopping is the mistake this manager exists not to make. Its usual answer is either "nothing to do" or "this position has quietly grown too large — trim it back".

Installing two managers that read the same event the same way tells you nothing: you get one answer twice and a track record that cannot separate them. This package exists to be genuinely different from a bottom-up reader — it reaches a different answer to the same event, for a reason you can state in one sentence.

	basic-investor	prudent-allocator
starts from	the asset	the book
reads	filings, news, prices, the book	the book, prices, the theses, the briefs
the question	what does this event say about this company	what does this event do to this portfolio's downside
its usual answer	WAIT, or BUY with a thesis	WAIT, or RESIZE
the trigger it arms	a price level	a drift in weights

The methodology

Top-down, and risk-budget-first.

Words this page uses, in plain terms:

The book	your portfolio as a whole — every holding, plus cash
Weight	how much of the total a holding is, as a percentage
Drift	a weight that changed because prices moved, not because anyone decided it should
Mandate	the rules you wrote for your own money: what may be held, how large any one thing may get, how much cash to keep
Thesis	the written reason a position exists, including the condition that would prove it wrong
RESIZE	changing how much of something you hold, without claiming the reason for holding it is dead
Downside	what it costs the whole book if the hopeful reading is wrong

The four stages are read in order.

1 — Exposure. Inventory before opinion. Total and cash, the three largest positions by weight, where the event's subject sits in that ranking, and the shape of the book by asset class and market. Then price history over a longer window than a bottom-up reader would ask for, because the question is not is this a good price but how far has this already travelled. Drift that nobody decided is the most common way a portfolio ends up outside its own mandate, and it is invisible on any screen that draws returns instead of weights.

2 — Downside. The event read the wrong way round: if the optimistic reading is wrong, what does the book lose, in points of total value? A 40% fall on a 3% position costs 1.2 points; a 15% fall on a 22% position costs 3.3. The second is the bigger problem, and every bottom-up reading of those two facts gets it backwards, because it reads the 40% and stops.

This stage also checks your theses against their own invalidation conditions. A thesis whose stated stop has been met and which is still marked active is the portfolio lying to you, and correcting it is worth doing inside a decision that otherwise concludes WAIT.

3 — Risk Budget. The mandate's constraints read as budgets: how many points a name may still gain, how much cash may still be spent, what may be held at all. Three rules come out of it, and the third changes what gets proposed — a budget spent by drift is RESIZE back to the weight you would have chosen, not to the cap, because returning to exactly the cap re-arms the same problem on the next good week.

4 — Verdict. One action, with a bias toward the smaller instrument: if RESIZE and SELL both address the finding, RESIZE keeps your original judgement and corrects only the part that drifted. SELL claims the thesis is dead, and that is a different claim.

How a run works

One run, one proposal. Nothing below places an order.

flowchart TB
    classDef reads fill:#1e2a44,stroke:#6f9bf0,color:#cfe0ff
    classDef judges fill:#2f2f38,stroke:#9aa0b4,color:#e8eaf2
    classDef proposes fill:#1b4332,stroke:#40916c,color:#d8f3dc
    classDef person fill:#5c4813,stroke:#f6a609,color:#ffe8b0

    WAKE["Aumos wakes it on an event,<br/>an asset review or a thesis review"]:::reads

    subgraph IN["What it reads"]
        direction TB
        BOOK["Your portfolio — every weight, and cash"]:::reads
        PX["Price history, over a long window"]:::reads
        TH["Your theses and their<br/>invalidation conditions"]:::reads
        BR["The book's standing conclusions<br/>written by this and other managers"]:::reads
    end

    subgraph JUDGE["What it works out"]
        direction TB
        S1["1 · Exposure<br/>inventory before opinion —<br/>where does the subject sit in the book?"]:::judges
        S2["2 · Downside<br/>if the hopeful reading is wrong,<br/>what does the book lose in points?"]:::judges
        TCHK["Has a thesis met its own stop<br/>and stayed marked active?"]:::judges
        S3["3 · Risk Budget<br/>the mandate read as budgets:<br/>what may still be spent"]:::judges
    end

    Q{"4 · Is the exposure wrong,<br/>and by more than it is<br/>worth acting on?"}:::judges

    WAIT["WAIT<br/>the book is where it should be"]:::proposes
    RESIZE["RESIZE<br/>back to the weight you would have chosen,<br/>not to the cap"]:::proposes
    SELL["SELL<br/>only when the reason for holding it is dead"]:::proposes

    BRW["Records a book-wide conclusion,<br/>if it reached one"]:::proposes
    ARM["Arms the next review<br/>on a drift in weights"]:::proposes

    subgraph HUMAN["Where a person decides"]
        direction TB
        MAND["Aumos judges it against your Mandate"]:::person
        YOU["You approve, or you do not"]:::person
        ORD["Only then does an order exist"]:::person
    end

    WAKE --> IN --> S1 --> S2 --> TCHK --> S3 --> Q
    Q -- no --> WAIT
    Q -- "drifted" --> RESIZE
    Q -- "thesis dead" --> SELL
    WAIT --> BRW
    RESIZE --> BRW
    SELL --> BRW
    BRW --> ARM --> MAND --> YOU --> ORD

Legend — 🟦 what it reads · ⬜ what it works out on its own · 🟩 what it hands back · 🟧 where a person decides.

Cadence. It is woken by an event like every other manager rather than by a calendar, and the trigger it arms is a drift in weights rather than a price level — which is what makes it the manager that notices a portfolio slowly leaving its own mandate.

What it needs

Markets	US-listed equities and ETFs (XNAS, XNYS)
Data	source:passthrough — price history for each holding, asked of the market vendor this machine holds a credential for. The response is the vendor's, unread by Aumos
The book	portfolio:read — the book is the subject. Every judgement is about the portfolio's exposure, not about an asset in the abstract
Your theses	thesis:read — the invalidation conditions already written down, so a position is judged against the reason it was taken
The book's notes	brief:read and brief:write — a conclusion about the whole portfolio (a regime read, a sector call, a hold on new entries) has no asset to attach to, so it lives here. Readable by the other managers on the same book
Settings	how much price history to read, how close to your cap counts as concentrated, and the smallest change worth proposing. None of them can loosen your Mandate
Your approval	it proposes and never trades. Every judgement enters your approval queue and a person approves it

It asks for less than a bottom-up reader, and that is the point. There is no fundamentals:read and no news:read; basic-investor has both. Aumos builds each manager's toolbox from its declared capabilities, so this manager's session does not contain a filings tool or a news tool at all. It cannot read a filing. Where the judgement turns on one, the prompt requires it to say so in its stated uncertainty — which is what a narrower manager owes you, and what the install screen shows before anything is installed.

There is no way to write a capability to trade. No such capability exists in the protocol — it is the absence of the spelling, not a denial that could get an exception later.

What it is bad at

• Not a risk model. There is no VaR, no covariance and no factor decomposition. Stage 2 asks for an order of magnitude and says so; a number with three decimal places produced from a price series and a plausible story is a fabricated number in a lab coat.
• Not a rebalancer. It does not run on a calendar and it does not restore target weights as a matter of routine. It is woken by an event like every other manager, and REBALANCE is the answer it reaches least often.
• Not a second-opinion service. It is not told what any other manager concluded, and there is no way to tell it. Two managers judging one event independently is what makes the comparison mean anything; showing one the other's answer would make them one manager with extra steps.
• It cannot read a filing. Where the answer turns on one, it will say it does not know.

Do not install this as your only manager if you want something that finds new ideas — its subject is the exposure you already have.

Notes

Installing it. Browse the catalogue in Aumos, install it against a book, and consent to the capabilities above — they are shown before anything is installed.

LIVE means proposals enter the approval queue against your real book. A book may have more than one LIVE manager, and Aumos does not merge them: two managers proposing conflicting targets for one book have no resolution rule, and inventing one would be Aumos deciding something nobody approved. So each seals its own judgement, each arrives in your approvals naming itself, and you decide the order — including deciding not to. Installing this one beside another is how you compare them; shadow is the mode for comparing without any of it reaching an order at all. Its shadow book opens as a copy of your own, dated at the moment the instance was created. From that instant the two diverge, and the divergence is the measurement.

Aumos shows no returns for this package until it has earned some. A forward track record takes calendar time rather than compute, and nothing on this page is one.