Western Dawn fishing boat. The bridge in the background is a 4 mi. bridge that connects Oregon and Washington.
Welcome to the Winter Solstice. Christmas is soon here and 2024 to follow. November was an outstanding month for equities and December should also end on a positive note. This review of the Bethe Portfolio reflects these good times for U.S. stocks. There is one major change for those using the Sector BPI model. Communication Services or VOX moved into the overbought zone so the BPI model recommends setting a Trailing Stop Loss Order (TSLO) under those shares.
Bethe Investment Quiver and Holdings
Below is the current investment quiver and holdings for the Bethe. What to do with the cash will be explained later in this update.
Bethe Security Recommendations
Within the Kipling spreadsheet we have this security recommending worksheet. All the Buy signals are reflective of a strong market. Keep in mind that we do not pay attention to these recommendations for the ETFs with the gray background or the sector ETFs. Those securities are driven or recommended by the Sector BPI investing model. We do pay attention to the recommendations for VTI, VOO, and ESGV.
Bethe Manual Risk Adjustments
The following worksheet from the Kipling spreadsheet guides us as to how many shares to hold for VTI, ESGV, and VOO. In a worksheet that rests just before the one you see below is where I adjust a few risk settings. The SD Multiplier is set to 1.61 so the Stop Loss percentage for VTI is 8.0%. The second adjustment I make is with the Maximum Trade Position Risk. This was adjusted to 0.55% so the Maximum Portfolio Risk is close to 6.0%. Note that it is 6.05%. These are two risk controlling settings I make within the Kipling spreadsheet.
With these settings the recommendation is to add 30 shares of VTI and 80 shares of ESGV. Although I show adding another five (5) shares of VOO to the current 40 shares, that is a mistake. The recommendation is to hold 17 shares and I already hold 40 shares in the Bethe. I don’t plan to add more shares of VOO to the Bethe.
While I plan to place limit orders to purchase more shares of VTI and ESGV, at the same time I have 8.0% TSLOs in place for the current holdings so as to protect capital. If I were to add more shares of VOO I would place a limit order at 10% to 15% below the current price or below the TSLO setting. I hope this makes sense and is not too complicated.
Bethe Performance Data
Over the past two years the Bethe holds a one percentage point lead on SPY and an even greater margin over the other five potential benchmarks. While the gain is not memorable, it is significant in that it is besting all the benchmarks.
Bethe Risk Ratios
Through much of 2023 the Bethe has not performed all that well on a risk adjusted basis. Only recently did I switch the Bethe to the Sector BPI investing model so 2024 will be a real test for this account. The Jensen Performance Index is close to zero so we are at the starting line as we approach 2024. The Information Ratio is in positive territory and it is the Information that is a head to head comparison with the SPY benchmark.
Once we clear the February data there is a good chance the slope of the Jensen Alpha will turn positive. That is something to watch.
Questions and comments are always welcome. Just post them in the Comment section provided below. Wishing everyone a Merry Christmas.
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