Recognizing strengths and weaknesses among primary asset classes is the core goal of our Tactical Trend strategy. The strategy seeks to identify relative strength and trend strength in an attempt to allocate capital to the strongest asset classes while underweighting or eliminating exposure to the weaker asset classes. The asset classes analyzed and allocated to can include US equities, international equities, fixed income, commodities, and cash.
As in the previous four quarters, our primary exposure continues to be to US and international equities. Regardless of political and geopolitical global headlines, the world’s equity markets have remained serene, with a steady bid into any minor pullback. Commentators search for a reason for the sustained strength, but the markets are always a complex summation of multiple inputs. We find it impossible and foolish to try to pinpoint a single factor responsible for the consistent demand for equities. Our weekly research meetings at Cumberland focus on multiple markets and capital positioning. We attempt to complement global fundamental views with technical thoughts and ideas pertaining to risk vs. reward. Current trend, relative strength, and momentum readings have been solid, and our trading has been limited in Tactical Trend during Q3. The thinking is currently to buy weakness rather than sell strength. That strategy can and will change if some of our analytics start flashing caution, as they did briefly back in March. That pullback and each subsequent pullback was bought aggressively by the market. We will remain alert to indications of trend change and continue to monitor opportunities across multiple asset classes.
Matthew McAleer
Managing Director & Portfolio Manager
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