Flags and Flannel
As positive results from the Carson portfolio began to emerge, I began switching portfolios that were using either the Relative Strength or Dual Momentum models over to the Sector BPI investing model. Bohr is one of the portfolios that began the transition in late October and early November of 2023. With little data to go on I will be relying on growth trends based on the Risk Ratio data table shown below. Another year of data is a minimum before any conclusions can be drawn as to the viability of the Sector BPI model.
Bohr Investment Quiver and Holdings
Cash is currently the largest holding in the Bohr as I sold off most of the original holdings and we have only recently seen another buying opportunity. Right now all except two sectors are overbought. The two holdouts are Consumer Staples (VDC) and Energy (VDE). This information is current as of 12/28/2023.
Bohr Manual Risk Adjustments
No sector ETFs are currently recommended for purchase. When sectors are out-of-favor we look to U.S. Equities as the next place for buying opportunities. VTI is currently the highest ranked ETF when selecting from VTI, VOO, and ESGV. As you can see from the data table below the Bohr hold 120 shares of VTI when only 99 are recommended by the Kipling spreadsheet. ESGV is also recommended for purchase and the Bohr holds only 100 when 261 are recommended. I have several limit orders in to purchase shares of ESGV to bring it up to 260 shares.
Bohr Performance Data
Over the past two years the Bohr lags the SPY benchmark by a little less than four percentage points (annualized). The goal is to begin to close that gap through the use of the Sector BPI model. A glimpse of movement is available in the Risk Ratio data table found below.
Bohr Risk Ratios
We see a little improvement in the risk metrics since early fall. Since the Bohr has only been using the Sector BPI model for two months we need to pay attention to the November and December data. Improvement is small or slight, but the direction is important.
Since the Bohr holds such a high percentage in cash, I don’t expect to see much improvement with respect to the S&P 500 until we experience another buying opportunity. That is likely several months away. A great deal of patience is require when holding the Bohr.
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Lowell,
Merry Christmas! And a Happy new year.
I also have a lot of cash currently and am considering converting some to bond ETF’s next year as interest rates seem to be coming down. Cash is paying 5% now but I am concerned that may change. Are you considering any changes to cash allocations? MY Current favorites include AGG, BND, SCHP HYG & EMB
Bob
Bob P.,
My first preference for a bond fund is BND as one is part owner of Vanguard when one invests with them. Expense ratios are 3 basis points for both BND and AGG and they nearly tie when performance is the determining factor. I’ve also used SCHP and HYG, but not EMB.
I’m uncertain when it comes to putting cash to use. I’ve set low limit orders to pick up more shares of VTI or VOO or ESGV. If history is any guide we will see a 15% drop in prices sometime within the next six months. At that time I want cash to purchase sector ETFs.
Then we have the 2024 election hanging over our heads. That is a big uncertainty and I don’t have a clue as to how the market may react depending on the outcome.
Lowell
Lowell,
Thanks for your comments.
As Yogi Berra once said: “It is difficult to make predictions, especially about the future.”
Good luck in 2024 we may need it.
Bob
Bob,
We are going to need more than luck in 2024. We need voters who are interested in maintaining a Republic/Democracy and spurn a wanna-be autocrat who is bereft of any moral character.
Lowell
Well said about risks facing America. In addition, I feel we need to be preparing for these two possible government shut down dates, Jan 19 and Feb 2, 2024. These two dates could very well be the times for triggers of a possible 15% general US equity market drop over the next 6 months.
Lee,
Looks like we are simpatico and thank you for the reminder of the coming budget crisis. More reasons to build up some cash reserves. Thank you for the reminder. Appreciate it as this information has not been reported frequently in the news as we close out 2023.
Lowell