Rutherford Portfolio Review (Tranche 5): 10 June 2022

Swan Reflections

Last week we were looking at what looked like a breakout of the downtrend channel and a possible change to a positive trend (blue regression channels in the following screenshot):

This still looked like the case for the first two days of the week – but then everything changed and we lost over 6% in value over the last three days and closed down ~5 % on the week. It is looking as though we may well test the recent lows at ~380 (SPY). Identifying trend channels is always subjective and, with the new data, a wider channel (yellow channel) looks more appropriate.

If we check on where US equities fit into the relative asset class performance over the past week:

we see that it is close to the bottom – with Commodities and Gold being the only asset classes to generate positive returns.

If we check on current holdings in the Rutherford portfolio:

we are reminded that we are holding 60% in DBC and GLD (Commodities and Gold) – so it is not too surprising to see good performance:

Even the poorest performing Tranche is now outperforming the benchmark AOR Fund – that demonstrates the benefits of including Commodities and Gold in the investment quiver even though these assets do not generate dividends.

Let’s check current rankings and recommendations from the BHS model:

where it is not surprising to see DBC as the only recommended Buy.

To confirm this we only need to look at the rotation graphs to see why:

DBC is the only asset with momentum outperforming SHY – our “zero momentum” benchmark.

This is again confirmed by the recommendations of a rotation model:

Based on the above, I shall not be making any adjustments in Tranche 5 (the focus of this week’s review) but I will continue to hold on to the shares currently held in GLD, despite the Sell recommendations, since it is still ranked #2 and there is a reasonable amount of green across the columns.

David