Well, 2019 turned out to be a pretty good year in the markets…but now what? I thought that now might be the right time for an assessment of market conditions to make sure everyone has realistic expectations. In a nutshell, the stock market has continued to move upwards in spite of ongoing concerns around the world. It almost feels like it is looking beyond the headline news and is seeing better times in the future that may not be so apparent right now. The slow and steady pace of economic news and reasonable corporate profits are fueling its performance and quite frankly, events that may not affect earnings are literally being ignored. Hmmmm…that worries me a wee bit. If I “bean count” the valuations…the stock market simply looks expensive and it seems to be about 10% above the so called support levels (it is trading at 18.4 x Price/Earnings). So bottom line…I think we will once again see a pullback shortly. Who knows what the catalyst will be…but it will be something.

 

So what to do?

 

Take a little profit off the table! Don’t drastically sell down, it might even be best to just re-balance your account back to target weights. Peek at the assets that are sheltered inside your TFSA or registered account so as not to trigger tax liabilities and make sure you have some buying power. I think I would like to see roughly 15-20% cash at the moment. If you have a discretionary account with me, I am re-balancing the accounts now, so don’t worry, it is being taken care of. But if you do not have a discretionary account, you might want to have a chat with me…so please reach out!

 

I hope this helps.