When Oppenfolio launched, the buying plan was simple. A fixed mix of symbols, each with a set target weight. Every so often I would make a manual adjustment, but the structure was static. New contributions followed the plan without any memory of what had worked best or what had lagged behind.
That approach was easy to manage but left efficiency on the table. So we’ve pivoted. Now every purchase shifts the mix slightly, based on how each symbol has contributed to new money over its lifetime. If a symbol has delivered more than expected, it earns a little more weight the next time. If it has underperformed, it gives some back. Over time the system adapts, growing leaner and more efficient without requiring constant manual intervention.
That’s the first layer of dynamism. The more important one comes from how we balance forces.
Macro and Micro
Investors tend to see portfolios from one of two vantage points. The macro view looks at the whole system. The danger here is that a strong position can disguise several weak ones, and the potential to improve earnings through smarter allocation gets lost in the average.
The micro view examines each holding in isolation. That path leads to tinkering, second-guessing, and tax inefficiency. You end up trying to time individual moves that can’t really be predicted. It feels active but it rarely adds value.
What matters is the engineering. Seeing how the forces interact and designing a system that can capture the energy without burning itself up.
Fuel and Containment
The core of Oppenfolio is made of synthetic option instruments. They are designed to pay out aggressively. When they win, they win big. When they lose, they lose faster. Losses are part of the structure, not a failure of design. On average, I’ve measured about a one percent monthly drop in net asset value across the core.
That is the decay force. It is always there, and it must be contained.
In a nuclear reactor, magnetic forces hold the reaction inside a shell. In a portfolio, the only counterforce strong enough is growth. Real equities, not synthetic ones. Equities that can expand over time, even if slowly.
Oppenfolio began without growth instruments. It was built for income alone. But to counter NAV decay, the shell had to change. We introduced DIVO, a monthly payer that focuses on high-quality dividend stocks with room to grow. The plan is to let DIVO’s gradual appreciation offset the structural decline of the core, bringing balance to the whole system.
Reading ULTY Correctly
Take ULTY as a case study. Last year it lost nearly half of its NAV. At the same time, it distributed more than its entire NAV back to holders. Both facts are true. If you only see the loss, you walk away from a major source of income. If you only see the payout, you concentrate risk and set yourself up for disaster.
The Oppenfolio approach is to recognize both truths. ULTY is fuel. Left alone it burns itself down. But contained properly, it becomes productive. The spread between decay and payout can be harvested when the system is designed to channel it rather than chase it.
Toward a Living System
With the dynamic buy plan and the addition of growth to the shell, Oppenfolio has become less of a static allocation and more of a living machine. Each new dollar is guided by data toward a slightly better balance. The core keeps producing fuel, even as it decays, and the shell absorbs that force with growth. Together they create a reactor that is stable enough to run and strong enough to keep paying.
That is the philosophy behind the shift. Not to eliminate risk, not to chase perfect timing, but to build a portfolio where opposing forces do the work for us.
If the design holds, Oppenfolio will continue to harvest the difference. Fuel and containment. Decay and growth. A system built to endure.
You can always reach The Architect at [email protected] if you want to go deeper.
Disclaimer: This post is for informational purposes only and reflects personal opinions, not financial advice. Oppenfolio is not an investment advisory service. See site disclaimer for full details.