The Papa Bear is based on the book Muscular Portfolios (BenBella Books, 2018) by Brian Livingston. The strategy is a clone of a 2013 whitepaper by Mebane Faber. It is an extension of his book The Ivy Portfolio, which has been tracked with real money since 2006.
The Papa Bear is designed to (1) keep losses small during bear markets, (2) underperform the S&P 500 with less volatility during bull markets, and (3) wind up with superior performance over each complete bear-bull market cycle.
The investing menu consists of low-cost exchange-traded funds (ETFs) that track 13 asset classes. Your portfolio allocates roughly equal dollar amounts to the three ETFs with the strongest momentum, as determined by the strategy rules.
The table below updates every 10 minutes during market hours. But don't trade every day! Check and tune up your portfolio only once a month, on the same day of your choosing. The best gain is achieved by reallocating on or around the last trading day of the month (see Newsletter #29).
| Asset class | Average of 3, 6, 12- mo. gain | ETF symbol | Price | Buy |
|---|---|---|---|---|
| US large-cap growth stocks | +19.73% | VUG | 329.19 | 34% |
| Gold | +16.64% | IAU | 44.11 | 33% |
| US small-cap growth stocks | +13.65% | VIOG | 107.38 | 33% |
| US large-cap value stocks | +13.52% | VTV | 158.00 | — |
| Developed-market large-cap stocks | +9.92% | VEA | 48.52 | — |
| Emerging-market stocks | +8.86% | VWO | 41.84 | — |
| US small-cap value stocks | +7.66% | VIOV | 83.22 | — |
| Commodities | +3.51% | PDBC | 14.29 | — |
| US real-estate investment trusts | +3.44% | VNQ | 80.12 | — |
| Non-US sovereign & corporate bonds | +2.54% | BNDX | 48.31 | — |
| US high-quality corporate bonds | +0.34% | VCLT | 73.81 | — |
| US Treasury notes, 10-yr | -0.74% | VGIT | 57.14 | — |
| US Treasury bonds, 30-yr. | -7.43% | EDV | 68.41 | — |
Strategy rules:
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Execution Rule: Buy or sell an ETF only if its bid-ask spread is less than 1.0%. (If greater than 1.0%, a "flash crash" might be occurring. Check an hour later to see whether an orderly market has been restored.) Popular ETFs typically have spreads below 0.2%, but some bond and commodity ETFs have legitimately higher spreads due to trading differences.
KEY TO STATS
Average of 3, 6, 12-mo. gain is equal to an ETF’s nominal total gain (including dividends) over the average of the past 63, 126, and 252 trading days.
Prices and gains are only a few minutes old, while spreads are at least 20 minutes delayed. The numbers are recalculated approximately every 10 minutes while the market is open. To refresh your browser window, press F5 (Windows) or Command+R (Mac).
Bid-ask spread is the difference between the bid price and ask price of a security, typically expressed as a percentage. You may select prices for any day in the past three months using the orange calendar tool, but spreads are shown only for the current day.
A flash crash is a temporary situation lasting a few minutes, during which prices and spreads suddenly move far from their typical values.
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