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A. Stotz All Weather Strategies – April 2024

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The All Weather Strategy is available in Thailand through FINNOMENA. If you’re interested in our allocation strategy, you can also join the Become a Better Investor Community. Please note that this post is not investment advice and should not be seen as recommendations. Also, remember that backtested or past performance is not a reliable indicator of future performance.

What happened in world markets in April 2024

Performance of the World stock markets

  • Tech-heavy NASDAQ fell by almost 3%
  • Japan fell slightly
  • China A rebounded and Hong Kong saw a strong rebound
  • Europe was up too

Find the updated Performance of the World stock markets here.

World stocks fell by 3.3% in April

  • In 2023, World stocks were up 22.8%
  • In 2024YTD, they’ve gained 4.8%

Global bonds fell 2.5% in April 2024

  • We had a minimum 5% target allocation to global bonds
  • Expectations about continued high rates drove down bond prices

Commodities gained 3.1% in April 2024

  • We had a minimum 5% target allocation to commodities

WTI oil closed April 2024 at US$83/bbl

  • Ongoing conflicts related to Gaza, i.e., US-Iran proxy war held up oil prices

Industrial and precious metals drove commodities in April 2024

  • Demand for industrial metals from green transformation and AI businesses remains strong
  • At the same time, miners of, for example, copper have announced reduced output

Gold gained 5.0% in April 2024

  • We had a 5% target allocation to gold
  • Gold closed the month at US$2,285/oz
  • Central bank buying, retail buying in China and India, and “safe haven” buying continued to drive the gold price

All currencies have weakened >10% against gold in 2024YTD

  • Typically, a stronger US$ means a lower gold price in US$ and vice versa

US CPI higher than expected

  • CPI came in at 3.5% YoY, while the expectation was 3.4%, and core CPI came in at 3.8% YoY, while the expectation was 3.7%

New all-time-high for gold

  • The gold price has reached new heights, as it traded above US$2,300/oz t for the first time in history

Central banks load up on gold

  • China acquired over 225 tons of the metal alone last year
  • In 2022 and 2023, world central banks bought 1081 and 1037 tons of gold, respectively

Only one rate cut by the Fed is expected in 2024

  • Prediction markets now show a 36% chance of ZERO interest rate cuts in 2024
  • The base case has gone from 6 rate cuts to 1 rate cut this year

Yen records a 34-year low against US$

  • The Japanese Yen plummeted to a 34-year low against the US$ at >153 JPY/US$
  • Later in the month, JPY hit 160, and it’s thought that the BoJ intervened to stop the currency from free fall

China is picking up

  • The Chinese purchasing managers’ index moved to expansive territory in February due to rising export orders

Bonds only diversify under low inflation

  • Bonds are a good hedge for stock investors only if core inflation is predictably below 3%

60/40 is not as safe as you may think

  • Adding bonds to a diversified US equity portfolio reduces the probability of a large loss but does not eliminate it

US halts Strategic Petroleum Reserve (SPR) refill


Key takeaways

  • US CPI higher than expected
  • New all-time-high for gold
  • Only one rate cut by the Fed is expected in 2024
  • Yen records a 34-year low against US$
  • China is picking up
  • Bonds only diversify under low inflation
  • US halts Strategic Petroleum Reserve refill

Performance review: All Weather Inflation Guard

All Weather Inflation Guard fell 1.5%

Since inception, the strategy was up 5.9% and 8.7% above a 40/60 portfolio

  • The strategy has also experienced less volatility

In April 2024, the strategy was down 1.5%, which was 1.6% above the 40/60 portfolio

  • Our 5% target allocation to gold did great
  • TIPS also did well
  • Our 5% target allocation World Financials did well relative to other equities

Performance review: All Weather Strategy

All Weather Strategy fell 1.5%

Since inception, the strategy was up 42.7% and 21.1% above a 60/40 portfolio

In April 2024, the strategy was down 1.5%, which was 1.8% above the 60/40 portfolio

  • Our 25% target allocations to Developed Europe, Japan, and the US performed relatively poorly; still only US equity was below World
  • Our low bond allocation also helped the strategy relative to 60/40

Performance review: All Weather Alpha Focus

All Weather Alpha Focus fell 0.9%

Since inception, the strategy was down 0.8% and 7.8% above a 60/40 portfolio

And 2.3% above World equity, with a lot less volatility

In April 2024, the strategy was down 0.9%, which was 2.4% above the 60/40 portfolio

  • Our 22% tilt to India outperformed greatly
  • Our 22% tilt to Info. Tech. was slightly better than World equity, while Europe Small Caps underperformed

DISCLAIMER: This content is for information purposes only. It is not intended to be investment advice. Readers should not consider statements made by the author(s) as formal recommendations and should consult their financial advisor before making any investment decisions. While the information provided is believed to be accurate, it may include errors or inaccuracies. The author(s) cannot be held liable for any actions taken as a result of reading this article.

Posted in All Weather Strategy