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A. Stotz All Weather Strategies – December 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 December 2024

Performance of the World stock markets

  • US fell, but the tech-heavy NASDAQ was slightly up
  • Japan was slightly down
  • China was mixed; Hong Kong did the best
  • Europe was up more than all the above

Find the updated Performance of the World stock markets here.

World Equity was down in December

  • The strategy has a core target allocation of 20%
  • Expectations about fewer rate cuts by the Fed in 2025 hurt stocks

Global Bonds fell in December 2024

  • The strategy has a core allocation to Global Bonds; the current target allocation is at 45%
  • Expectations about slower rate cuts from the Fed led to rising yields and lower bond prices

Commodities rebounded in December

  • We had no allocation to Commodities

WTI oil closed December at US$72/bbl

  • OPEC+ production curbs gave a boost to oil prices

Energy and Agriculture drove Commodities in December 2024

  • Agriculture gained as adverse weather conditions are expected to keep supply tight

Gold fell in December 2024

  • We had a 10% target allocation to Gold
  • Gold closed the month at US$2,624/oz t
  • After a great price rise in 2024, part of the fall in the gold price was likely due to profit-taking before the year-end

All currencies have weakened >25% against Gold in 2024

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

US GDP is 50% larger than the EU’s

Massive US construction spending on data centers

S&P 500 fell on the Fed’s 0.25% cut

US$ is massively overvalued, says BofA

China is about to go loose; last time it happened was the GFC

Central banks continue to buy gold

Performance review: All Weather Inflation Guard

All Weather Inflation Guard fell 2.3%

Since inception, the strategy was up 7.2% and 7.3% above a 40/60 portfolio

  • The strategy has also experienced less volatility

In December 2024, the strategy was down 2.3%, which was 0.7% above the 40/60 portfolio

  • Global Bonds fell, Money Market and TIPS held up
  • Our 5% allocation to Info. Tech. and 10% allocation to Gold did better than World Equity
  • Our 5% allocation to Financials dragged

The strategy beat a 40/60 portfolio by 1.0% in 2024

Performance review: All Weather Strategy

All Weather Strategy fell 1.0%

Since inception, the strategy was up 46.8% and 19.1% above a 60/40 portfolio

In December 2024, the strategy was down 1.0%, which was 1.9% above the 60/40 portfolio

  • Our 25% target allocation to China did great
  • Our 25% allocations to US equity and Gold dragged, though Gold was better than World Equity in December

The strategy beat a 60/40 portfolio by 7.0% in 2024

  • The strategy has had a higher risk-adjusted return than 60/40 except in the past 6 months

Performance review: All Weather Alpha Focus

All Weather Alpha Focus fell 3.9%

Since inception, the strategy was up 1.2% and 5.1% above a 60/40 portfolio

And 4.5% below World Equity, but with a lot less volatility

  • We had a moderate equity target allocation at 68%, which led to a lag as World Equity rose

In December 2024, the strategy was down 3.9%, which was 1.0% below the 60/40 portfolio

  • Our big tilts to Asia Pacific ex Japan and Info. Tech. outperformed World Equity
  • Our big tilt to Precious Metals Miners constituted a massive drag on performance

The strategy beat a 60/40 portfolio by 3.5% in 2024

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