From the desk of Willie Delwiche.

When it comes to portfolio management, asset allocation matters. For many the starting point of this discussion of dividing assets between stocks and bonds. This leads to the often talked about 60/40 portfolio: 60% stocks and 40% bonds. From my perspective that is an incomplete opportunity set and decisions based on such an opportunity set are going to leave investors feeling underwhelmed. Stocks (VTI) and bonds (AGG) are important components, but commodities (DBC) and cash (MINT) need to be on the table as well. Commodities were the top performing asset class last year. Amid equity market weakness this week, commodities are moving to new highs (assets in up-trends tend to do that). Cash has been mocked recently as a guaranteed way to lose ground relative to inflation. That might be a small price to pay for the flexibility it can provide in the face of volatility elsewhere. Three consecutive years of 20%+ returns for equities can make investors financially and emotionally over-invested in stocks. Maybe it’s time to get back to the basics. Stocks. Bonds. Commodities. Cash. 

This is the video recording of the January 20th Weekly Town Hall w/ Willie Delwiche & JC Parets

01/20/22 2:00 PM ET

From the desk of Willie Delwiche.

The number crunchers are reporting that workers have gone missing. Plenty of jobs are available. But no one is showing up to fill the open positions. 

They are calling this phenomenon the Great Resignation.

It makes sense if you’re looking at the situation through the lens of the established system. Folks are dropping out, which means they must be giving up. If they wanted to work, they would work.

But what if people aren't so much opting out of one system, but actually opting into a different one? 

From the desk of Willie Delwiche.

From the desk of Willie Delwiche.

Two weeks into 2022 and EEM (Emerging Markets) has a 500 basis point YTD lead over SPY (S&P 500). Emerging markets are up more than 2% and the S&P 500 is down more than 2%. Short-term charts can make this look like a significant shift in leadership. While it may turn into that, at this point it looks like a premature conclusion. My guess is that we are in the early stages of a shift away from the US and toward global equity market leadership, including emerging markets. But two weeks of outperformance after a decade of relative weakness is not much of a signal. 

If we look at the history, all of the net gains in EEM over the past nearly two decades have come when the ratio between EEM and SPY has been above its 200-day average. The ratio is rising and the 200-day average is falling, so there is convergence. But there has not yet been a crossover. That’s the signal I want to see before getting too excited about the strength we are seeing from EEM. 

It’s certainly something to watch, but we want to watch with a bit of perspective.

From the desk of Willie Delwiche.

It was Bucks vs Warriors in Milwaukee last night. Giannis vs Curry. A marquee January matchup for the NBA. 

The game got away from Golden State early and they were down 48-24 with about 8 minutes to go in the first half. When the final buzzer sounded, it was a 118-99 Bucks win. Curry, who has been averaging 35 minutes per game this season, was only in for 29 last night. In fact, no starter on either team played more than 30 minutes.

Turns out a blowout in January is a great time for players (even the stars) to get some rest. It's a long season and when the must-win playoff games come around, coaches are going to want their players as fresh as possible.

This is the video recording of the January 13th Weekly Town Hall w/ Willie Delwiche & JC Parets

01/13/22 2:00 PM ET

From the desk of Willie Delwiche.

Don't judge a book by its cover is sage advice I'm sure we've all heard from a parent, teacher or mentor at some point in our lives. 

The message is clear. We’re not supposed to read a title or see a label and jump to conclusions. It's always better to get inside and see what something’s all about before deciding to embrace or reject it.

We’re seeing this play out in the market in several ways right now.

From the desk of Willie Delwiche.

From the desk of Willie Delwiche.

The cyclical weight of the evidence tilts toward opportunity.

Our tactical risk management model remains constructive even in the absence of a breadth thrust (though such an event would certainly help the bullish case). 

While not doing much from an asset class perspective, we have made some changes in our dynamic portfolios. Highlights include:

• Getting more constructive on Europe and the new highs coming from the UK. 
• Shortening the duration of our fixed income holdings as we start to upward pressure on interest rates.. 
• Making a clean (Technology-related) to dirty (Materials-related) rotation in our Tactical Opportunity portfolio. 

Overall we continue to position these portfolios not for what could or should happen but consistent with the message of the market and an eye on what is happening.