Carson Sector BPI Portfolio Update: 16 October 2023

Painted Hills – Central Oregon

The Carson is the oldest Sector BPI portfolios and one of the better performers tracked here on the ITA blog.  The current condition is going to be one to watch as it will be a good test to see if the Sector BPI model can outperform the S&P 500.  Based on the Bullish Percent Indicator (BPI) data from last week we have five oversold sectors and a sixth (Materials) very close to an oversold condition.  When these oversold sectors eventually reach the overbought zone and are sold out of the portfolio we should see portfolio improvement when compared to the S&P 500.  Will oversold sectors improve at a faster rate than the broad stock market is the cogent question?  If this is not the case, then we are better off to simply purchase the market through SPY and avoid all the time consuming effort involved with the Sector BPI model.

Carson Investment Quiver and Holdings

The Carson is fully invested in the five oversold sectors.  In addition, the portfolio holds shares in VTI, SPY, and VOO, all closely correlated with the S&P 500.  The Carson investment quiver and current holdings are listed in the following table.

As you can see from the second column from the right, a few of the sectors are forming a smaller percentage of the portfolio than recommended in the third column from the left.  VOX was purchased many months ago and has yet to reach the overbought zone.

Carson Security Recommendations:

The current recommendation is to remain out of U.S. Equities so I will most likely set Trailing Stop Loss Orders (TSLOs) of 8% for shares of VTI, SPY, and VOO.  Should any of these equities be sold, the cash would be used to purchase more shares of the oversold sector ETFs.

Carson Manual Risk Adjustments

Cash is in short supply.  If anything I will purchase a few shares of VAW as Materials is very close to the oversold zone.  Otherwise, no changes are planned.

Carson Performance Data

Since 12/31/2021 the Carson has maintained a comfortable margin over the S&P 500 (SPY).  The lead is even larger when compared with the other possible benchmarks.

Carson Risk Ratios

The following data table provides additional performance information missing from the Internal Rate of Return data shown above.  I prefer to see trends and the Jensen and Information Ratios exhibit this information.  By the end of this calendar year I anticipate the slope of the Jensen will once more be positive for the Carson.

While the Jensen is lower than it was in September, 8.8 is still a very high value.

Sector Performance for 2023

From time to time I’ll include the following data so readers can grasp performance of the various sectors in more detail.

Focus your attention on the eleven sectors.  The following table breaks down how well each of the sector ETFs performed thus far in 2023.  Drop a comment if you think the following information is of use.

Tweaking Sector BPI Plus Model: 20 May 2023

Copernicus Buy & Hold Portfolio Review: 18 May 2023

Schrodinger Computer Manage Portfolio Update: 7 June 2023