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Posted January 28, 2026 at 9:22 am
1/ Emerging Markets!
2/ Value + Momentum Blend
3/ Gold vs. Stocks
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Emerging Markets!
Emerging market stocks are shining in 2026. With the help of a declining US dollar, Emerging markets are +10% year-to-date. Absolute prices are breaking out to new all-time highs, and the relative trend (EEM / SPY) is displaying evidence of reversal.
The above chart displays the 15yr history of EEM / SPY. We’ve seen periods more recently (2017-18 and 2021) when the price ratio has appeared to reverse trend but ultimately failed to hold key technical levels. We’ll see how things resolve this go-around. Emerging market stocks making new highs is certainly “risk-on” behavior. The type of positioning investors take in a bull market!
Value + Momentum Blend
Two equity factors that work quite well together are Value and Momentum. It’s been noted by many that a blended strategy of Value and Momentum can at times outperform each individual strategy on both an absolute and risk-adjusted basis. When evaluating the ratio charts below, you can understand why.
The chart displays Momentum vs. SPY (blue line) overlayed with Value vs. SPY (red line). The Value ratio is set on an inverted scale. The lines appear to move with one another, meaning that in reality, when Momentum is outperforming the broad market, Value is underperforming and vice versa. This can help reduce portfolio drawdowns and subdue momentum price shocks we see far too often.
Gold vs. Stocks
I’m not big on price analogs – they aren’t valuable in my opinion, but man are they interesting. The below compares the Q1 1973 breakout of Gold vs. Stocks to the Q1 2026 breakout. In both instances, Inflation was cooling following a big rise in the preceding years. The Gold vs. SPY breakout occurs at this inflection point, where inflation re-accelerates and Gold prices soar over stocks. Will we see something similar this time around?
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Originally posted 28th January 2026
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