ETF selection

Hi all!
Sorry for the perhaps the silly question: let’s say I want to build a portfolio which buys 2 specific ETFs in bull markets and 2 specific ETFs in bear markets - how could I implement this in the buy/sell rules?

Matteo

Matteo,

first you have to define conditions (formulas) of what a “Bull market” or a “Bear market” is for you.
Depending on that you can define specific buy and sell rules.

So the buy rule would be something like this:

eval($BullMkt,Ticker("RSP"),Ticker("IEF"))

and the sell rule would be the inverse:

eval($BullMkt,Ticker("IEF"),Ticker("RSP"))

In this example, $BullMkt is a custom variable you can define according your own definition.

Also, Ticker() can be a given a list. The number of symbols you give it in this example should match the number of positions you define in the port.

I have tried the following buy rule:

eval(1,Ticker("IEF"),Ticker("RSP"),Ticker("SPY"),Ticker("VOO"))

but I get an error when trying to run it

I am trying to set up a buy and hold strategy, so i thought that inserting “1” instead of $BullMkt wouold have worked - anyone knows what’s wrong with it?

An Eval formula must have a condition to be evaluated. The number “1” is not a condition. So the buy rule should be
eval($BullMkt,Ticker(“RSP,SPY”),Ticker(“IEF,VOO”))
and sell rule = 1

Here is a buy rule for a 50/200-day moving average crossover of the S&P500.
eval(sma(50,0,$sp500)>sma(200,0,$sp500) ,ticker(“vea,VTI”),ticker(“Vtip,vmbs”))

Thanks!
But what if I wanted a buy and hold strategy, always 100% invested in those 4 ETFs?
Would inserting a “silly” $bullmkt condition work? like the close price of SP500>0

Your buy rule would be
Ticker(“RSP,SPY,IEF,VOO”)

and sell rule would be
nodays > 10000
then stocks would never be sold.

Thank you! J

Technically, it is. It resolves to true in the system, as does any number but zero. Zero resolves to false.

Buy and hold is, ironically, one of the toughest things to do on Portfolio123. The closest way to do it is not to never sell, but to always sell.

So your buy rule should be:

Ticker("RSP,SPY,IEF,VOO")

And your sell rule should be:

True

Make sure that you Allow Immediate Repurchase on the Rebalance tab. Then set the rebalance to daily. (Weekly should probably be OK too.) Also, set your transaction costs to zero. (They’re immaterial in a buy-and-hold strategy.)

Without those constant sales, you’ll never reinvest dividends, and so your returns are probably going to be lower than they should be. (Obviously, if you’re not picking up anything with dividends, it won’t matter.) Even this is an approximation, because you’re not reinvesting the dividends into the same stocks.

The problem is that the four ETFs will be held equal weight (or at the weights specified), and that dividends from a particular ETF are not necessarily reinvested into the same ETF.
The only way to get the correct performance of the 4 ETFs combined is to run a sim for each of them alone and combine the performances in a spreadsheet.
Note that data for VOO is only available from Sep-2010.

It is also not possible to combine the individual ETFs in a book, because the option to never rebalance does not exist. Perhaps that option should be added.

Paul,

I think, if you reinvest dividends (into an ETF), transaction costs are not immaterial. And you have to manage weight adjustments of the ETFs, which could produce transaction costs.

Both fair points. I think it’s the best approximation that we have.