Tiny Seed Wealth Builder

Safe Strategy: Modified All-Weather

Rebalancing Rules

• Threshold: Rebalance when any position drifts 5% from target
• Frequency: At least quarterly, or when threshold triggers
• Priority: Use new contributions first (tax-efficient)
• Order: SHY > BND > GOVT > TIP > VTI > VXUS > GLD > DBC

Growth Strategy: Dual Momentum + Factor Tilt

Signal Generation Rules

1. Calculate composite momentum for each offensive asset using 1, 3, 6, and 12-month returns (equal weighted)
2. Rank assets by composite momentum score
3. Select top 2 assets by relative momentum
4. Apply absolute momentum filter: each selected asset must have 12-month return > SHY return
5. If no assets pass, go 100% defensive (SHY)
6. If 1+ assets pass, allocate equally among passing assets

Defensive Triggers

Complete Algorithm Pseudocode

MONTHLY_INVESTMENT_DECISION(portfolio_data):

    // PHASE 1: SAFETY CHECKS
    emergency_status = CHECK_EMERGENCY_RESERVE(current_reserve, monthly_expenses)
    IF emergency_status == "CRITICAL":
        RETURN { action: "FUND_EMERGENCY_RESERVE", amount: full_contribution }

    // PHASE 2: SEASONAL ADJUSTMENT
    current_season = GET_FARM_SEASON(current_date)
    contribution = base_contribution * SEASON_MULTIPLIER[current_season]
    // Harvest (Jun-Oct): 1.5x | Planting (Mar-May): 0.75x | Winter (Nov-Feb): 0.25x

    // PHASE 3: RISK ASSESSMENT
    drawdown = (peak_value - current_value) / peak_value
    volatility = CALCULATE_ROLLING_VOLATILITY(daily_returns, 21_days)

    IF drawdown >= 0.15:
        risk_status = "CRITICAL"
        growth_mode = "DEFENSIVE"  // Override momentum
    ELSE IF drawdown >= 0.10:
        risk_status = "ELEVATED"
        growth_mode = "DEFENSIVE"
    ELSE:
        risk_status = "NORMAL"
        growth_mode = CALCULATE_MOMENTUM_SIGNAL()

    // PHASE 4: MOMENTUM SIGNAL (if not overridden)
    IF growth_mode != "DEFENSIVE":
        FOR EACH asset IN [QQQ, VUG, MTUM, VBK]:
            momentum_score[asset] = COMPOSITE_MOMENTUM(
                weights: [0.25, 0.25, 0.25, 0.25],
                lookbacks: [1, 3, 6, 12 months]
            )

        top_assets = TOP_N(momentum_score, n=2)
        cash_return = MOMENTUM(SHY, 12_months)

        passing_assets = FILTER(top_assets, WHERE momentum > cash_return)

        IF passing_assets.empty:
            growth_mode = "DEFENSIVE"
            growth_holdings = { SHY: 100% }
        ELSE:
            growth_mode = "OFFENSIVE"
            growth_holdings = EQUAL_WEIGHT(passing_assets)

    // PHASE 5: BUILD TARGET ALLOCATION
    target_allocation = {}

    // Safe portion (75%)
    target_allocation += SAFE_STRATEGY * 0.75
    //   VTI:  15.0%  | VXUS: 7.5%  | BND:  15.0%
    //   TIP:  11.25% | GOVT: 7.5%  | GLD:  5.625%
    //   DBC:  3.75%  | SHY:  7.5%

    // Growth portion (25%)
    target_allocation += growth_holdings * 0.25

    // PHASE 6: REBALANCING
    drift = CALCULATE_DRIFT(current_holdings, target_allocation)

    IF max(drift) >= 0.05 OR new_contribution > 0:
        // Step A: Use contribution to buy underweight (tax-efficient)
        underweight = SORT_BY(drift, ascending=true)
        FOR EACH position IN underweight WHERE drift < 0:
            buy_amount = MIN(position.shortfall, remaining_contribution)
            ADD_TRADE(BUY, position, buy_amount)
            remaining_contribution -= buy_amount

        // Step B: If still drifted, sell/buy (less tax-efficient)
        IF still_needs_rebalancing:
            FOR EACH overweight_position:
                ADD_TRADE(SELL, position, excess_amount)
            FOR EACH underweight_position:
                ADD_TRADE(BUY, position, shortfall_amount)

    // PHASE 7: RETURN DECISION
    RETURN {
        contribution_amount: contribution,
        trades: generated_trades,
        growth_mode: growth_mode,
        risk_status: risk_status,
        action_items: prioritized_actions
    }

Signal Calculation Formulas

momentum = (current_price - past_price) / past_price

// Example: 12-month momentum for QQQ
momentum_12m = (price_today - price_252_days_ago) / price_252_days_ago

// Multi-timeframe weighted average
composite_momentum =
    0.25 * momentum_1m +
    0.25 * momentum_3m +
    0.25 * momentum_6m +
    0.25 * momentum_12m

drawdown = (peak_value - current_value) / peak_value

// Peak value = highest portfolio value achieved
// Track separately for total portfolio and growth allocation

// Daily returns over 21 trading days
daily_returns = [(price[t] - price[t-1]) / price[t-1] for t in range(21)]

mean = sum(daily_returns) / 21
variance = sum((r - mean)^2 for r in daily_returns) / 21
daily_stddev = sqrt(variance)

// Annualize using sqrt(252)
annual_volatility = daily_stddev * sqrt(252)

// Asset must beat cash to pass
passes_filter = asset_momentum_12m > cash_momentum_12m

// Cash benchmark: SHY (1-3 Year Treasury)
IF asset_return_12m > SHY_return_12m:
    INCLUDE in offensive holdings
ELSE:
    EXCLUDE from holdings

// For each position
current_percent = position_value / total_portfolio_value
target_percent = target_allocation[ticker]
drift = current_percent - target_percent

// Rebalance trigger
IF abs(drift) >= 0.05:  // 5% threshold
    needs_rebalancing = TRUE