Coming sometime over the next two month is a new investing model. I’ll classify it as a Bullish Percent Indicator ETF Sector Model. I’ve hinted at this approach from time to time, but have not laid out the investing strategy in detail. I have no back-testing to support this model so be cautious if you plan to emulate this investing system.
With permission from the owner of the Carson Trio, the experiment will end sometime over the next two months. It is quite clear that the LRPC model works best when using the 60- and 100-trading days look-back combination. This is the default combination that was thoroughly back-tested a number of years ago by Hedgehunter. I’ll fold the proceeds from the Carson BHS and Carson HA portfolios into the Carson LRPC and title the new portfolio Carson. I’ll maintain the Carson LRPC Risk Ratio data with some adjustments to the Sortino Ratio as the Sortino involves the total value of the portfolio.
Carson Investment Quiver
Below is the investment quiver for the new portfolio. VTI will not be used as one of the investing “arrows.” It is included for the purpose of toggling the Target Screen on or off.
I plan to use the ten Vanguard sector ETFs as the core for investing. SHV and SCHP will be used as holding securities when there is excess cash.
Note the purple arrow which points to the maximum that will be invested in any single sector ETF at any given time. I favor certain sectors based on the percentages. These are guidelines at this time and will likely change in the future.
Basic Investing Process:
- When a sector ETF is in the over-sold zone it is a candidate for purchase. Over-sold is when a sector is 30% or lower in the BPI data table. The BPI table is published nearly every week.
- When a sector ETF is in the over-bought zone it is a candidate for sale. Over-bought is when a sector is 70% or high in the BPI data table.
- After an ETF is purchased and the sector ETF moves into the over-bought zone, a 3% TSLO is set under the ETF. When the TSLO is triggered, the money will revert to cash, SHV, or SCHP and wait for the next round of purchases.
Fine Tuning Investing Model:
- The Kipling will be used to spot the best performing sector ETF should there be times when multiple sectors are in the over-sold zone. Multiple purchase situations happen frequently when we are in a bear market.
- Note the Strategic or Max AA percentages in the following table. If more than one sector ETF is in a buying situation, we will fill the ETFs based on their ranking using the Ranking column found in the right side of the Kipling. This will become clear after a few reviews.
- When cash is available, it will be invested in either SHV or SCHP, two low volatile securities.
Carson Investing Model
Assume we find VDE and VFH are both over-sold. If this were the situation, we would purchase 70 to 72 shares of VDE and 108 or 110 shares of VFH. If VAW was also over-sold and cash is available, we would buy shares of VAW despite its #7 position. Bullish Percent Indicators will dictate buy and sell decisions rather than following the directions from the Kipling spreadsheet.
Readers: If you come up with any “what if” situations, place them in the Comments section and I’ll attempt to answer as best I can.