Current Global Relative Strength Conditions

Lets discuss the current state of global relative strength asset categories.

UPDATED 3.16.23

Six Major Asset Categories

Ranked in order of Relative Strength (see note on RS below this section):

  • 1. International Equities

  • 2. Cash

  • 3. Domestic Equities

  • 4. Commodities

  • 5. Fixed Income

  • 6. Currencies

Currently, the strongest 2 (out of the 6) asset categories are International Equities and Cash.

#1 International Equities

International Equities is ranked #1 (out of the 6 major asset categories) in terms of long-term Relative Strength.

The table below shows the performance of the 6 major sectors of this asset category. Highlighted are the top 2 strongest sectors in terms of Relative Strength.

Emerging Europe Fund (TREMX) has moved to the top of the International Equities Asset Category with the strongest one-month price performance of -5.74%.

The next strongest sector on a long-term Relative Strength basis is now Asia Pac Dev (IPAC).

#2 Cash

Cash holds firm in the #2 spot of our long-term Relative Strength asset category ranking. Current market conditions maintain that it is a strong, safe investment option for investors at this time.


The Importance of Relative Strength Investing

Our focus is on Relative Strength. RS studies are the cornerstone of Avalon's investment approach. In the above section, we alert you to the top 2 strongest asset categories in terms of Relative Strength.

When most financial media and investment advisors or analysts describe "the strongest" groups, in terms of price performance, they traditionally speak in terms of "comparative performance." This simply means they're comparing the gains over a certain timeframe (such as 1-month, 6-months, 12-months). There is a start date and an end date and depending on which dates are used, the picture can be skewed.

This method can lead to big mistakes, but it's easiest to explain this in soundbites to investors and viewers who aren't interested in learning about Relative Strength. But viewing price performance in terms of RS is a much more effective way to find the true leaders and to find the likely leaders of the near future.

Therefore, our tables are organized in terms of 1-month performance (the traditional "comparative performance" way of reporting price strength that most folks are used to). And we then highlight, in yellow, the groups that are strongest in terms of Relative Strength – the more sophisticated and more effective way of recognizing the current and likely near-future winners.

The groups highlighted in yellow are where we are focusing most of our clients' investments.

We highlight the top 2 (of 6) strongest asset categories in terms of Relative Strength and then we highlight the top 2 strongest sectors within those asset categories, in terms of Relative Strength.


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