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A. Stotz All Weather Strategies – January 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 January 2024

Performance of the World stock markets

  • US was slightly up
  • Japan was the best performer by far
  • Hong Kong and China A fell big
  • Europe was up more than the US

Find the updated Performance of the World stock markets here.

World stocks continued up in January

  • In 2023, World stocks were up 22.8%
  • In 2024, they gained 0.6%
  • Falling inflation across developed markets and expectations of peak interest rates held up stocks

Global bonds fell in January 2024

  • Expectations that rate cuts won’t come in 1Q24 in the US and EU led to higher bond yields, which means bond prices fell (as yields and prices move in opposite directions)

Commodities rebounded in January

WTI oil closed January 2024 at US$76/bbl

  • Ongoing conflicts related to Gaza, i.e., US-Iran proxy war, led to an uptick in oil prices

Livestock and Energy drove up commodities in January 2024

Gold fell 2.1% in January 2024

  • Gold closed the month at US$2,039/oz
  • Expectations about delay in rate cuts by the Fed led to weaker gold price (as it strengthens US$ and high real rates make gold less attractive)

USD, GBP, and CNY strengthened against gold in January 2024

  • All currencies weakened relative to gold in 2023
  • Typically, a stronger US$ means a lower gold price in US$ and vice versa

GDP growth driven by budget deficit

Both Apple and Microsoft hit a $3trn valuation

Rate hikes haven’t hit companies

79% of fund managers expect a soft or no landing in 2024

Non-US equity isn’t expensive

Ships avoid the Red Sea, which increases shipping costs

Key takeaways

  • US GDP growth from massive deficit spending
  • Apple and Microsoft hit $3trn valuation
  • Rate hikes haven’t impacted companies
  • 79% of fund managers expect a soft or no landing in 2024
  • Non-US equity isn’t expensive
  • Ships avoid the Red Sea, which increases shipping costs

Performance review: All Weather Inflation Guard

All Weather Inflation Guard lost 0.4%

Since inception, the strategy was up 5.1% and 7.1% above a 40/60 portfolio

  • The strategy has experienced less volatility

In January 2024, the strategy was down 0.4%, which was 0.9% above the 40/60 portfolio

  • The World equity fund outperformed the MSCI AC World index massively
  • Our target allocation to World IT also did well
  • TIPS, Gold, and Global bonds dragged on performance

Performance review: All Weather Strategy

All Weather Strategy gained 2.3%

Since inception, the strategy was up 34.7% and 13.4% above a 60/40 portfolio

In January 2024, the strategy was up 2.3%, which was 3.2% above the 60/40 portfolio

  • Our big target allocation to Japan outperformed massively
  • Our big target allocations to the US and Developed Europe performed well too

Performance review: All Weather Alpha Focus

All Weather Alpha Focus gained 0.6%

Since inception, the strategy was down 5.8% but 3.2% above a 60/40 portfolio

And 0.4% above World equity, but with a lot less volatility

In January 2024, the strategy was up 0.6%, which was 1.5% above the 60/40 portfolio

  • The strategy was 0.6% above World equity
  • Out of our big tilts, World Energy and World Info. Tech. did well, while Europe Small Caps dragged slightly on performance

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