Family cat – circa 2003
In anticipation of questions that may arise in understanding the Buy-Hold-Sell recommendations from the new Kipling spreadsheet, below is an example that will serve to answer a few questions. This happens to be the Bethe portfolio, but that is not important for this lesson.
Interpreting BHS Recommendations: The Maximum Number of Assets is set to six (6). Four ETFs rate a Score of 10 and they are all a Buy. This is rather straight forward. Now look for the ETF with a Rank of five. I’m referring to the Rank column that is fifth from the right. The ETF is AGG and it is a Sell.
- If AGG were part of the portfolio, the Position recommendation would be a Hold. However, no AGG shares are in the portfolio so the recommendations is to not buy any shares. AGG does not meet the Buy Floor value of 9.
- Now move to the ETF with a Rank of 6. Again, I am referring to the Rank column on the right side of the table. The ETF with a Rank of 6 is RYU. The reason RYU is a Hold is that it is currently part of the portfolio. The Score is only 7 so it falls short of the Buy Floor of 9, but it is recommended to stay in the portfolio since the Hold Floor score is 5 or above.
- Now here is an important point. Had I set the Maximum Number of Assets (MNA) to 5, RYU would show up as a Sell. When the new SS becomes available, users may want to increase the MNA from five or six up to a much higher number to see if any current portfolio holdings show up as a Hold recommendation.
There will likely be other questions, but overall, the spreadsheet is quite easy to use and understand despite all the sophisticated calculations going on beneath the surface.
Lowell & David,
Would be nice if the weights assigned to the 4 variables that are used to calculate the new Score & Rank on this sheet was displayed at the top something like the LSR1, LSR2 & Volatility weights for the momentum rankings is. This would help with understanding and eventually learning how the various weightings affect a users quiver.
Looking forward to release of the spreadsheet.
BobT
Bob,
Check again – they are shown in the cell above the appropriate columns.
David
David,
I see those now which I understand is how the Score values are determined. But how are the Rank values calculated?
BobT
Bob,
No, those values don’t come into the score values – check https://itawealth.com/refining-the-lrpc-momentum-system-the-lrpc_bhs-system-part-1-adding-short-term-heikin-ashi-signals/ to refresh on details for that.
The rank values are calculated in the same way that Momentum Ranks are calculated for the 50/30/20 weightings of LRS1, LRS2 and Volatility. Each parameter (Momentum, H1, H2 and P-C) is ranked individually and then the four products of (rank x weighting) are summed to generate a total weighted value for each asset. These values are then sorted/ranked to generate what is shown in the Score Rank column. Although calculation details are not provided in https://itawealth.com/refining-the-lrpc-momentum-system-the-lrpc_bhs-system-part-4-score-ranking/ a re-read of that post may help put the above explanation in more context.
David
David,
Got it!
Thanks,
BobT
Okay Lowell – I’m just now getting to this. Let’s see if I do better this time. Please send me the new spreadsheet.
thx – mark
Mark,
Here is the link to the page give you all the information you need. All instructions are contained in this post from HedgeHunter.
https://itawealth.com/kipling-lrpc_bhs-workbook-3-4/
This is only available to Platinum members, of which you are one.
Lowell