The US markets in particular have sold off in the last three weeks. While this is certainly irritating, I’d like to point out a few facts, in an attempt to allay any concerns you might have.

The S&P500 & Nasdaq (as of Jan 24th close) are down year-to-date approximately -7.2% and -10.91% respectively, but the S&P/TSX (Canada) is only down -2.9% (again as of Jan 24th). I am constantly speaking to clients about the importance of balance within a portfolio. It is for this reason that those under my care are not experiencing the same level of recent declines, in comparison to the US numbers cited above.

Several clients (as is their right), opted to overweight themselves in the larger pure growth names such as Amazon (-13% ytd), Apple (-8.8% ytd) and so on, so they undoubtedly will be feeling the hit a little more, but still, they are not off anywhere near the US average because I’ve insisted that we maintain a healthy position in other value names such as the Canadian financials and so on.

I’ve often said “volatility is here to stay”, but in the same breath I’ve talked about the need to stay invested in the good quality names we already own. This current circumstance is no different.

One of the perks of being at RBC Dominion Securities is having access to the best experts in the field. Jim Allworth, our Chief Investment Strategist, is one such individual. This is his latest:

Potential threats regularly come on and off the stage and it’s always worth considering what they might mean for the economy and financial markets. But structuring a portfolio as if one or more were likely to occur soon would have left a portfolio uninvested, or at least under-invested, for most of the past 15 years if not longer. In our view, an investment portfolio diversified across asset classes – where the equity component is diversified sensibly across industry sectors and owns the best, most resilient businesses in each sector – is the most appropriate stance in a world of unpredictable possibilities.

I’m very confident that the portfolios I’ve structured for clients meet the above parameters.

This report published today, by our Portfolio Advisory Group, speaks to the current situation and points out again (as I discussed in my commentary earlier this month), the economy is shifting to a more sedate pace of expansion, and therefore we should expect markets to be on edge, at times.

I’m always available to talk if you’d like to discuss what I’ve written above, or anything else for that matter.

Libby

 

 

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