Chinese Panda
Readers interested or testing the Sector BPI Model will want to follow the review of the Carson, the oldest of this style of investing here at ITA. When I go through these portfolios I first check on the most recent Bullish Percent Indicator (BPI) data. Yesterday there were three over-bought sectors or sectors that showed BPI data at 70% or higher. Those sectors are: Discretionary (VCR), Financial (VFH), and Technology (VGT). There are no sectors in the over-sold zone so we have no buying opportunities. Keep the cash in the money market, a TIPs such as SCHP, or a short-term treasure such as SHV.
Carson Sector Investment Quiver
The only over-bought sector held in the Carson is VGT or Technology. I checked the broker account and there is a Trailing Stop Loss Order (TSLO) already in place to sell 35 shares of VGT. With over $22,000 in cash there are multiple limit orders to pick up more shares of SCHP as TIPs is one place to park available cash. Note that SCHP is currently throwing off a yield of 7.2%, a health sum.
VOX and VPU sectors are in the “neutral” zone so I will let them ride. No action is required.
Carson Performance Data
The Carson is one of the top performing portfolios with an annualized IRR value of 5.7%. Compared to the negative values for all the possible benchmarks, the difference is stark. Holding on to this huge lead is going to be difficult.
Carson Risk Ratios
When looking at the graph below the Treynor peak back in July and August sticks out. As I recall, the Carson at that time was primarily in cash so the beta was very low. When that happens, the Treynor spikes.
For the last three months the Information Ratio has been very high and growing. This is the ratio showing how the portfolio is performing with respect to the AOA benchmark. When the Information Ratio is on the increase, this is a very positive sign for the Sector BPI Model. Watch the IR closely.
The Jensen is decreasing slightly due primarily to the increase in the interest rate of the risk-free U.S. Treasury. That factor puts downward pressure on the Jensen. Nevertheless, the Jensen Performance Index is extremely high.
Carson Portfolio: Creating A New Investing Model
New Carson Launched: 4 November 2022
Buying Guidelines For BPI Model Portfolios: 9 December 2022
If you have questions or comments, please post them in the Comment section provided below. I’m interested in your ideas.
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Lowell,
By using SCHP as a holding spot for cash, are you concerned at all about it losing value? Looks like it took a hit over the past year.
TF
T,
Not overly excited. The other options are a short-term treasury (SHV) or leave it in a money market.
I need to put SCHP into Portfolio Visualizer as I know that site does a better job of including dividends in the final performance outcome.
Lowell