From the desk of Willie Delwiche.
This All Star Charts PLUS Monthly Playbook breaks down the investment universe into a series of binary decisions, tactical calls and asset allocation models.
Paired with our Weight of the Evidence Dashboard and our Playbook Chartbook, this piece is designed to help dynamic asset allocators follow trends, pursue opportunities, and manage risk.
The trend in commodities has rolled over but, for the 96th week in a row, the up-trend in commodities relative to stocks remains intact. You need to go back to the early 70’s to see a longer sustained period of strength in commodities versus stocks.
Why It Matters: For some, commodities are the forgotten step-child of asset allocation discussions. This is especially the case for those with a narrow frame of reference and a lack of historical perspective. Prior to the current trend favoring commodities over stocks, stocks had been trending higher versus commodities in 440 of the preceding 480 weeks (that’s 90% of the time over almost a decade). Going back to the 70’s staying in harmony with the stocks/commodities trend would have helped increase portfolio returns AND reduce portfolio volatility. What happens going forward remains to be seen. Right now keeping the trend as your friend means favoring commodities over stocks even though neither is trending higher on an absolute basis.
