Millikan Sector BPI Portfolio Review: 6 February 2024

Moss – Image made with an iPhone.

Millikan is the Sector BPI portfolio up for review this morning.  Since no sectors of the U.S. Equities market are oversold we look for buying opportunities other than sector ETFs.  The three ETFs of interest are:  VTI, VOO, and ESGV.  I’ve not expanded the Millikan to include VEA and VWO.  I’m testing that option with several other portfolios.

Millikan Security Holdings

Below is the current investment quiver and holdings for the Millikan.  The Kipling spreadsheet recommends a Buy for all three ETFs of interest.  Check the right hand column.  The Manual Risk Adjustment worksheet provides guidance as to how many shares to purchase for either VTI, VOO, or ESGV.

Millikan Manual Risk Adjustments

Once more I set the SD Multiplier to 1.71 so the Stop Loss for VTI is 8.0%.  This is my first risk control adjustment within the Kipling spreadsheet.  The next adjustment is the Maximum Trade Position Risk.  With a setting of 1.16% the Maximum Portfolio Risk is close to 8% (red arrow).  With these adjustments the Kipling is recommending one add 15 shares of ESGV to bring the total number of shares up to 75.  This will leave over $9,000 in cash (purple arrow).  VTI and VOO are well over the recommended limit.  I don’t worry about this as the goal is to exceed or come close to the SPY benchmark.  If a portfolio is carrying too much cash it will lose ground to the SPY in a rising market.

Millikan Performance Data

Since 12/31/2021 the Millikan has managed to exceed the SPY benchmark by approximately two percentage points.  Of the six possible benchmarks I track, SPY is the most difficult one to beat.

Millikan Risk Ratios

Once the February 2023 data is cleared the slope of the Jensen Alpha will not equal the current 0.44 value.  Enjoy the high value while it is still present.

I watch the Information Ratio as it is a head to head comparison with SPY and over the past year this metric is in steady decline.  This is most likely due to carrying such a high percentage of the portfolio in cash.  My market inclinations at this point are to remain cautious due to the uncertainty of the upcoming U.S. election.  It is difficult to predict what might happen if the USA loses its democratic/republic.

If history is any predictor, sometime this year we will see multiple sectors dip into the oversold zone and I want available cash on hand to purchase those sector ETFs when that happens.

Questions and Comments are always welcome.