If you are looking for a portfolio that needs attention, look no further than the Dashboard of the Bohr Portfolio as presented below. Asset classes coded with the purplish color are all under target while the red are above target. To rectify these issues and bring the portfolio back into balance, I have a number of limit orders in place. As the market continues to rise, the current prices are walking away from my limit order prices. I don't plan to chase this market as I expect a correction sometime this summer. Therefore, I am sticking with my limit orders. So far my stubbornness or patience is costing money.
Available cash was a constraint in bringing every asset class back into balance unless I sold off some bond and income holdings. I plan to do that next week. With TLT near $94.00, it is prudent to sell some shares. In addition, I was just told that this particular portfolio will receive an infusion of new cash. That is always good news as available cash makes rebalancing easier. However, I plan to be slow in putting new cash to work. One exception I will likely make has to do with an attractive stock that was number one on the "Creme List" this week. The Bohr currently holds one stock, Procter and Gamble (PG). I would like to increase the number of stocks to increase diversity.
It is reasonable to ask, how can one improve diversity be adding stocks to a portfolio already holding hundreds of stocks within a wide variety of ETFs? This is where I rely on results from the Quantext Portfolio Planning (QPP) analysis. Long-time readers have seen the benefit of adding a few highly selected stocks to an ETF oriented portfolio. It is important to select stocks that have a low correlation with the ETF oriented portfolio.
Below are the performance numbers and asset make-up of the Bohr Portfolio. Note the very high Sortino Ratio (SR) and Retirement Ratio (RR) values. In reality, the SR value is even higher, but I needed to insert a "fudge factor" since the portfolio has always outperformed the VTSMX benchmark. Without the "fudge factor" the semi-variance denominator becomes zero and the ratio blows up into infinity. To fully understand what is happening, the reader needs to dig into the calculations in the SR worksheet of the TLH Spreadsheet.