Two out of Three Ain't Bad

Igor Manukhov - Feb 24, 2023

Canada and US have virtually identical relative performance, meanwhile International and Emerging markets are gaining relative strength.

Today I wanted to review one of my past charts to demonstrate how some of my past recommendations worked out. Over the last few months I pointed out that Canadian market has been gaining relative strength against US, meanwhile Emerging markets and EAFE Markets (Europe, Australia, Far East) have been outperforming Canada. So far the score is two out of three.

Canadian market lost some of it relative strength to US. Those two markets don't have a clear leader at this time, they are performing on par to one another (read line on the top).

On the other hand, emerging markets (green line going down) and EAFE markets (Pink line going down on the bottom) are gaining strength against Canada.

This review also vividly demonstrates a key principal behind relative strength framework. I want to buy and own relatively stronger assets for as long as they continue to outperform. When relative strength of my position disappears, I would replace it with another position that is gaining relative strength. This process will not have a 100% betting average, nothing will. But it is self regulating, and it allows me to accomplish two things that are critical in portfolio management:

1. Identify and participate in new and emerging uptrends (ex. EAFE market gaining relative strength against Canada and US)

2. Get out of past uptrends that are turning into downtrends before it is too late (ex. switchover from technology to energy)

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Two out of Three Ain't Bad

Igor Manukhov - Feb 24, 2023

Canada and US have virtually identical relative performance, meanwhile International and Emerging markets are gaining relative strength.

Igor Manukhov

Peter Kuntyj

Yelena Manukhova

Brittany Stone

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