LBR The Motley Fool Foolish Four Portfolio Rotation Strategy

Linda Bradford Raschkey's Foolish Four Portfolio Rotation Strategy

This strategy implements a rules-based portfolio rebalancing framework inspired by systematic dividend-style equity rotation concepts. It is designed to simulate structured portfolio reallocation on a fixed schedule rather than short-term trading.

🔍 What This Strategy Does

The strategy:

• Rebalances either monthly or yearly
• Allocates capital across four positions
• Uses fixed percentage allocation
• Applies realistic trading conditions (commission + slippage)
• Limits per-position risk to sustainable levels (default 5%)

This is a capital allocation strategy — not a signal-based indicator.

🧠 Core Concept

Instead of attempting to predict price direction, this model:

Uses time-based portfolio rotation.

Closes all open positions at rebalance.

Reallocates capital according to chosen weighting logic.

Maintains disciplined exposure caps.

Two allocation modes are included:

1️⃣ Equal-Weight Variant

Allocates capital evenly (25% per asset).

2️⃣ Weighted Variant

Allocates heavier exposure to one asset (40%) and lighter to others (20%), capped by the defined risk % to remain compliant with sustainable equity exposure.

⚙️ Default Strategy Properties

To comply with TradingView backtesting standards:

Initial Capital: 100,000

Order Size Type: Percent of Equity

Default Order Size: 25%

Commission: 0.05%

Slippage: 2 ticks

Pyramiding: 0

Risk Cap Per Position: 5% (user adjustable 1–10%)

These settings are used in the published version.

If users modify these values, results will change.

📊 Backtesting Notes

• Designed for long historical datasets
• Works best on equities or ETFs
• Monthly rebalance recommended to generate sufficient trade count
• Not optimized for short-term scalping
• No forward-looking data is used

Users should test across multiple assets and timeframes.

This script does not guarantee profitability and makes no performance claims.

📈 How To Use

Add to chart of a liquid equity or ETF.

Select Monthly or Yearly rebalance.

Choose allocation variant.

Keep realistic commission & slippage.

Backtest over 10+ years for meaningful sample size.

📌 Important

This is a structural portfolio framework for research purposes.