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Bethe is updated today as it is a good followup to the Bohr review posted yesterday. These two portfolios are managed with a similar three tier approach. The first order of business is to fill any Sector BPI recommendations. The second management decision is to employ the Dual Momentum™ model if cash is available. The third level or choice is to use available cash to purchase high yield Closed-End-Funds (CEFs).
This three tier model is designed to overcome what is likely to be a weakness in the Sector BPI model. Here is the problem that is likely to arise and one pointed out by one or more readers of this blog. Take the Health (VHT) sector as an example. Yesterday Health moved into the overbought zone so a 3.0% TSLO is in place. Should this TSLO be struck and VHT moves back into the neutral zone, only to then rise back into the overbought zone and continue to move higher, we have missed the growth opportunity.
The three tier model described or explained through the Bohr and Bethe portfolios should counter this problem.
Bethe Investment Quiver and Holdings
Below is the investment quiver for the Bethe and the current holdings. Note that the eleven (11) sector ETFs are listed at the bottom of the first column while the top four ETFs (excluding SHV) cover the Dual Momentum stock/bond asset classes. In the middle we have the CEFs. I would like to expand these nine to ten securities.
Bethe Security Recommendations
Based on current Bullish Percent Indicator data no sectors are positioned in the oversold zone so there are no Buy recommendations. We next move to see if there are any Buy recommendations for ESGV, VEA, VWO, or BND. We see where there is a Buy recommendation for ESGV so we need to check to see how many shares are recommended.
A considerable amount of cash will remain so we use it to pick up income generating CEFs.
Bethe Manual Risk Adjustments
Now we come to the decision making worksheet. Here is the plan.
- As mentioned before, no sectors are in the overbought zone so I’ll not be buying an of the 11 ETFs.
- 170 shares of ESGV are recommended so I will purchase 10 more shares of this U.S. Equity.
- Available cash will be used to pick up more CEFs. If GLQ and KYN are producing income of over 8.0% and have a negative NAV, I’ll add more shares of both until all cash is used.
Bethe Performance Data
Unlike the Bohr, Bethe has a comfortable lead over the S&P 500 (SPY) and the idea is for this three tier model to maintain this margin.
Bethe Risk Ratios
Here in the middle of April the Jensen moved back into positive territory. In fact all ratios improved over the final tally of March.
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Lowell,
What did you use as a criteria for selecting the CEFs in this portfolio? I’m assuming that they are a subset of the Huygens portfolio.
~jim
Jim,
I use CEF Connect.
For the Sector BPI portfolios I went into CEF Connect and took a fresh look to find acceptable CEFs that were throwing off yields of 8% or higher. Than I checked to make sure the CEF was priced below its NAV.
Lowell