Door Painting
Welcome to the first full day of Spring. To open up this season of the year I’ll update the Carson. For additional information on the Sector BPI investing model check out this Seeking Alpha article. I’ve been paying considerable attention to the four Sector BPI portfolios, particularly since we currently have five over-sold sectors. Discretionary (VCR) moved above the critical 30% line yesterday leaving Energy, Financial, Health, Industrial, and Materials over-sold. Today’s prices could change any of these positions.
If you are using the Sector BPI model in one of various forms, seriously consider tracking the Internal Rate of Return (IRR) and then compare the performance with respect to the IRR for SPY. An example is shown below.
Carson Investment Quiver and Holdings
Below is the current investment quiver and holdings for the Carson. The sector most out of balance is Industrial (VIS). This morning I sold 10 shares of VTI to raise cash to purchase additional shares of VIS. The limit order for VIS has yet to be struck.
Check out the third column from the left or Max AA. To come up with these percentages I multiply 0.70 x three-year annualized volatility. I select the 0.70 coefficient so the maximum percentage in any sector is 25%.
Carson BPI Recommendations
I use the Manual Risk Adjustment worksheet from the Kipling spreadsheet to provide guidance as to how many shares of each sector to purchase. While I prefer to hold 16% in VIS I don’t have available cash. The percentage will increase to 8% after 15 more shares are added to the existing five (5) held by VIS.
Carson Performance Index
The Carson is performing exceptionally well when compared to the S&P 500 (SPY). The actual S&P 500 is performing a tab below the SPY ETF. This data is approaching 15 months of history so it is not a lot to go on.
Carson Risk Ratios
All is will with the Carson when risk is examined. Short-term interest rates increased and that dropped the Sortino Ratio since this past February.
Jensen’s Performance Index is holding up nicely as is the Information Ratio. Now to move the slope of the Jensen back to positive territory.
With most of the over-sold sectors now fully populated this becomes a waiting game until one or more of the sectors are over-bought. Patience is now required.
ITA Portfolios: Summarizing Investing Approaches
Buying Guidelines For BPI Model Portfolios: 9 December 2022
Gauss Portfolio Update: 19 March 2023
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