San Miguel Mission in California.
Welcome to the first full day of summer. To open up the third quarter I’ll review the Franklin, similar to the Gauss updated yesterday. One major difference between these two portfolios is that the Franklin concentrates on using VOO and VTI when sectors are “out of favor” as is the current situation. As you will recall, the Gauss uses both domestic and international equities. By out of favor I mean there are no oversold or overbought sectors so no new purchases or sales are recommended. For example, the Franklin currently holds shares of VDC. Based on the last BPI report this sector resides in the neutral zone. When no sectors are oversold and cash is available we look to U.S. Equities such as VOO and VTI to put cash to work.
Franklin Security Holdings
The primary decision facing the Franklin is what to do with the $6,500 in cash. Limit orders are in place to pick up more shares of VOO and VTI.
Franklin Manual Risk Adjustments
As mentioned above, limit orders are in place to add to the VOO and VTI holdings. Although ESGV is part of the investment quiver I favor VOO as the goal is to keep pace with the S&P 500.
Franklin Performance Data
Since 12/31/2021 the Franklin continues to hold a slight lead over the SPY benchmark. The Franklin is outperforming all other potential benchmarks, some by an exceedingly wide margins.
Franklin Risk Ratios
Note that the Franklin began using the Sector BPI model in early November of 2022 so we are moving towards two years of data. The most encouraging data is the positive slope of the Jensen Alpha.
Franklin Sector Portfolio Report
During the period when the Sector BPI model has been operational the Franklin bested the SPY benchmark 57% to 42.3%. Once more, the Sector BPI model appears to be working as laid out in the original hypothesis.
Tweaking Sector BPI Plus Investing Model: Part II
Franklin Portfolio Review: 21 July 2023
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End of 2nd Quarter Notice: Unlike TD Ameritrade, Schwab does not terminate limit orders if they are about to be impacted due to dividends. At least this is a warning Schwab sent to me after the TDA portfolios were transferred over to Schwab. Therefore, if you have limit orders set close to the current price you may want to cancel those limit order until after the second quarter dividends are paid. Then reset them.
I just went through all the Schwab portfolios and canceled limit orders that were set close to the current price.
Lowell