Rutherford Portfolio Review (Tranche 4): 10 December 2021

It’s that time of the year again

A strange week in US equity markets with lots of action on Monday and Tuesday and consolidation through to the end of the week:

On Monday and Tuesday we saw 2 ~100-point (>2%) range days (grey shaded boxes) to the upside before we moved back into more normal ~40-point range days of sideways consolidation. Another interesting feature shown in the above screenshot highlights a lot of buying action in the last hour of trading on Friday of the last 2 weeks (green shaded boxes). This looks like major portfolio adjustment by fund managers as they “cook the books” for month/year end reporting. We ended the week ~3.8% higher than last week’s close.

As usual, we’ll put this in context with a comparison of performance relative to other major asset classes:

where we see that Commodities was the only asset class that performed better than equities (US and International) with Real Estate also showing strength. In contrast to last week, Bonds were the losers this week.

How did this affect the performance of the Rutherford Portfolio?

We see reasonable performance despite the fact that we were not holding US equities (VTI) as a result of being stopped out a couple of weeks ago. However, we have ~28% invested in AOR that holds ~70% in US equities. Also, even though we have been selling DBC over the last few weeks we still have an ~8.5% holding in Commodities:

I messed up my intended adjustments last week by working from the wrong spreadsheet on Monday, so I inadvertently sold shares in VNQ. Rather than incurring costs by reversing the trade I chose to buy shares in GLD in addition to the intended purchase of TLT.

In Tranche 4 (the focus of this week’s review) I am presently holding positions in VNQ, DBC and AOR.

What do the BHS recommendations say?

Cautious Hold recommendations for DBC and GLD.

Let’s check the rotation graphs:

where the recent recovery of DBC is obvious. Apart from that:

VTI is looking weak and VNQ is looking strong.

What do the rotation recommendations say?

Here we have Buy recommendations for AOR, VNQ and TLT. AOR and VNQ are already represented, DBC is held and a Hold recommendation from the BHS model-  so I’ll keep that. This leaves me with ~$5,600 cash that I’ll use to buy shares in TLT (with month-end dividend) rather than just leave it in Cash:

David