Spring is here. A summer iris.
Pauling is one of the portfolios where I am simplifying or reducing the number of asset classes down to four. One of the four, SHV, is a holding tank for cash when none of the other three are calling for a Buy. I’ll explain this in more detail below as I go through the March analysis.
Pauling Asset Allocation Holdings
Below are the current holdings for the Pauling. There is no concern that SHV is out of balance to the upside. Based on current prices none of the other three securities are recommended for purchase.
Pauling Rebalancing Recommendations
For those familiar with the Kipling spreadsheet this information will make sense. My current settings tilt toward the aggressive side due to the latest downward trend for U.S. stocks. I have the model set to BHS with the linear periods set to 13 and 26. The 13 trading days has a 60% weight while the 26 trading day carries a 30% weight. The remaining 10% is applied to volatility. These settings are fast reacting and designed to pick up any upward movement rather quickly. Any market move up will soon trigger a buy for one of the three equity ETFs. That is the basic idea.
In the following table you see none of the tree equity ETFs are recommended for purchase. If one were a Buy I would sell shares of SHV in order to bring the asset class up to balance. Once in balance I don’t intend to sell the equity ETF. New cash and dividends flowing into SHV will be used to keep the asset classes in balance.
Pauling Performance Data
Since 12/31/2021 the Pauling lags all potential benchmarks, some by a wide margin. Looking back one would have done much better to keep the portfolio invested in the S&P 500.
Pauling Risk Ratios
With exception of the Information Ratio the Pauling is better off today compared to a year ago. While the slope of the Jensen is still positive, this basic risk metric has been in decline since last fall. The hope is that the new and revised asset allocation model will begin to turn this trend around.
The Pauling is set up to pull in significant dividends from the first quarter. These will be used to purchase more shares of VOO, SCHG, and SCHD if and when they show up as a Buy.
Questions and Comments are always welcome.
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Lowell,
If you are going to “speed up” the Kiplinger model with fast reacting decision criteria designed to pick up any upward movement in the ETFs rather quickly, have you thought about reducing the Heiken-Ashi settings as well? I’ve been using linear periods of 22/45 (one-month/two months) and HA settings of 3 days and 5 days. Since you are going to use BHS, have you also thought about reducing the associated Buy Low/Sell High Period setting. I’ve reduced mine to 10 days.
We are living in interesting times.
Thoughts?
~jim
Jim,
Good points. I made the changes for the Carson which I will update tomorrow. Thanks for the suggestions.
Lowell