Each month, I post an update to my global asset allocation strategy. This strategy is a relative strength based research model I use to view the flow of funds within the global equity markets.
Last month’s holdings and performance:
December’s model holdings:
I am finding the increased weightings in US Treasuries (“TLT”) interesting. While the US equity markets continue to trade at record levels, the appetite for risk in global markets is diminishing.
Perhaps global investors are thinking that the Fed will remain fairly dovish during 2015 and are increasing their allocations to US markets.
Or, perhaps investors are worried what the Fed will do in 2015 and have already begun to reduce their exposure in overseas markets.
As we near year end, the S&P 500 Index continues to outperform its global counterparts:
One final thought: 2015’s theme could very well focus on the disconnect between US and international markets, which will increase volatility as traders try to take advantage of changing valuations.
Note: I/my clients may be long TLT, SPY, QQQ, EWH, EWS and/or EWN
Feel free to leave a comment below or you can reach out to me privately here.
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