Q1 Review
I initially was going to say that Q1 started off strong but looking back on the indexes, it really has just been flat for the first couple months. This last month or so has just been bloody. I am no expert on the matter but I believe this war could kick the recession into high gear. As the stock market falls, ultra high networth individuals who make up over 50% of consumer spending are going to pull back and spend less. If these people spend and invest less to preserve capital while markets are trending down, it could end poorly for the massive capex needed to fuel the AI boom which has thus far propped up US GDP.
Looking Forward
Unfortunately I didn't have the idea for this site until a couple months ago, but I've been running this relative strength strategy for a couple quarters now with decent results. Last quarter's portfolio can be seen below in the table.
| Symbol | Name | Quantity | Avg. Price | Cost Basis | Unrealized Gain ($) | Unrealized Gain (%) |
|---|---|---|---|---|---|---|
| SNDK | Sandisk Corporation | 2.08879 | 347.18 | 725.18 | 579.06 | 79.85 |
| WDC | Western Digital Corporation | 3.72723 | 199.23 | 742.57 | 296.43 | 39.92 |
| FIX | Comfort Systems USA Inc. | 0.71547 | 1026.86 | 734.69 | 255.96 | 34.84 |
| TER | Teradyne Inc. | 3.19299 | 220.76 | 704.88 | 246.66 | 34.99 |
| KEYS | Keysight Technologies Inc. | 3.33601 | 212.53 | 709 | 234.42 | 33.06 |
| STX | Seagate Technology Holdings PLC | 2.44957 | 307.51 | 753.26 | 180.42 | 23.95 |
| VLO | Valero Energy Corporation | 3.64644 | 184.26 | 671.89 | 231.7 | 34.48 |
| AMAT | Applied Materials Inc. | 2.45701 | 291.58 | 716.41 | 128.31 | 17.91 |
| CAT | Caterpillar Inc. | 1.13878 | 600.83 | 684.21 | 111.76 | 16.33 |
| ALB | Albemarle Corporation | 4.35577 | 161.58 | 703.82 | 82.83 | 11.77 |
| ROST | Ross Stores Inc. | 3.62465 | 186.88 | 677.38 | 91.66 | 13.53 |
| MU | Micron Technology Inc. | 2.10713 | 337.26 | 710.65 | 50.68 | 7.13 |
| KLAC | KLA Corporation | 0.51815 | 1357.99 | 703.64 | 56.69 | 8.06 |
| MRK | Merck & Company Inc. | 6.2892 | 108.89 | 684.81 | 65.11 | 9.51 |
| LRCX | Lam Research Corporation | 3.40481 | 203.8 | 693.9 | 41.61 | 6 |
| TPR | Tapestry Inc. | 5.17695 | 132.36 | 685.21 | 41.27 | 6.02 |
| INTC | Intel | 16.72466 | 42.7 | 714.13 | 11.39 | 1.59 |
| RTX | RTX Corporation | 3.70527 | 187.51 | 694.77 | 16.6 | 2.39 |
| BIIB | Biogen Inc. | 3.73914 | 185.02 | 691.8 | 19.16 | 2.77 |
| CAH | Cardinal Health Inc. | 3.40442 | 206.95 | 704.54 | 2.22 | 0.32 |
| HII | Huntington Ingalls Industries Inc. | 1.85268 | 361.69 | 670.09 | 36.49 | 5.45 |
| CHRW | C.H. Robinson Worldwide Inc. | 4.13881 | 166.11 | 687.48 | 0.76 | 0.11 |
| PH | Parker-Hannifin Corporation | 0.76254 | 909.26 | 693.35 | -5.39 | -0.78 |
| JBHT | J.B. Hunt Transport Services Inc. | 3.35619 | 204.52 | 686.42 | -2.97 | -0.43 |
| EA | Electronic Arts Inc. | 3.3692 | 204.4 | 688.68 | -9.75 | -1.42 |
| CMI | Cummins Inc. | 1.26859 | 540 | 685.04 | -12.75 | -1.86 |
| BK | The Bank of New York Mellon Corporation | 5.78139 | 120.8 | 698.37 | -32.3 | -4.63 |
| WBD | Warner Bros. Discovery Inc. | 24.26977 | 28.55 | 692.92 | -35.69 | -5.15 |
| NEM | Newmont Corporation | 6.50945 | 107.84 | 702.01 | -52.5 | -7.48 |
| REGN | Regeneron Pharmaceuticals Inc. | 0.85748 | 812.08 | 696.34 | -49.54 | -7.11 |
| DAL | Delta Air Lines Inc. | 9.67307 | 71.9 | 695.47 | -54.44 | -7.83 |
| APH | Amphenol Corporation | 5.10301 | 138.73 | 707.92 | -68.26 | -9.64 |
| C | Citigroup Inc. | 5.75072 | 121.28 | 697.45 | -61.77 | -8.86 |
| EXPD | Expeditors International of Washington Inc. | 4.35983 | 156.43 | 681.99 | -61.46 | -9.01 |
| GM | General Motors Company | 8.18703 | 81.72 | 669.01 | -58.18 | -8.7 |
| ROK | Rockwell Automation Inc. | 1.70798 | 409.1 | 698.74 | -94.23 | -13.49 |
| INCY | Incyte Corporation | 6.56521 | 110.94 | 728.33 | -125.45 | -17.22 |
| MS | Morgan Stanley | 3.74484 | 185.11 | 693.22 | -95.69 | -13.8 |
| GS | Goldman Sachs Group Inc. (The) | 0.7376 | 940.6 | 693.79 | -101.5 | -14.63 |
| GOOGL | Alphabet | 2.12063 | 322.34 | 683.56 | -98.31 | -14.38 |
| IVZ | Invesco Ltd | 24.63678 | 27.61 | 680.14 | -96.49 | -14.19 |
| LLY | Eli Lilly and Company | 0.64238 | 1104.7 | 709.64 | -133.73 | -18.84 |
| DG | Dollar General Corporation | 4.77305 | 143.33 | 684.1 | -115.39 | -16.87 |
| DLTR | Dollar Tree Inc. | 5.20988 | 131.46 | 684.88 | -132.58 | -19.36 |
| TMO | Thermo Fisher Scientific Inc | 1.13061 | 618.31 | 699.07 | -150.36 | -21.51 |
| UAL | United Airlines Holdings Inc. | 5.94818 | 116.96 | 695.69 | -151.13 | -21.72 |
| ULTA | Ulta Beauty Inc. | 1.04632 | 654.15 | 684.45 | -140.72 | -20.56 |
| FOXA | Fox Corporation | 9.13661 | 74.51 | 680.74 | -146.71 | -21.55 |
| EXPE | Expedia Group Inc. | 2.29144 | 297.95 | 682.74 | -154.65 | -22.65 |
| IQV | IQVIA Holdings Inc. | 2.84138 | 244.11 | 693.6 | -219.35 | -31.62 |
The new portfolio has already been uploaded for your entertainment.
I think I am going to go ahead and stress test this concept through a potential bear market to see how relative strength holds up. I have been strongly considering adding either a regime filter or adjusting the strategy based on market condition. I will continue to observe the performance over time and make adjustments to the system.
The new portfolio is pretty heavy in energy companies. This may come back to bite me.
The potential exists that we've just seen the market bottom and from here we will recover and make new highs. I have no idea what will happen ultimately. Energy companies could die or continue to outperform due to the looming energy crisis.