As a financial advisor, I wear many hats. One of my roles is to select the highest quality investments for my client’s portfolios, so that they may relax, spend their free time on what their preferred activities are, while reaching their financial goals.
I am also here to guide them through the emotions of fear and greed throughout market cycles
I need to ensure that my clients do not take on unnecessary risk when markets are high, and I also need to keep my clients calm and not make costly mistakes when markets are low.
The last 2 quarters were a perfect examples of this. The last quarter of 2018 was one of the worst corrections we have had in a long time. The year ended negative for all markets:
- TSX : -11.6%
- Dow: -5.6%
- S&P: -6.2%
- NASDAQ: -3.9%
- MSCI Emerging Markets: -16.6%
- Nikkei 225: -12.2%
- DAX: -18.7%
I was pleased to observe that my investments held up very well during this Q4 2018 correction, and to boot, ended up benefiting greatly from the large recovery that we experienced in this first quarter of 2019. Q1 2019 saw some great returns in capital markets.
Having said that, I am cautious going forward given that some technical indicators are showing that we could be facing some more bumps (and opportunities) ahead. I am taking some risk off the table, gradually, and positioning the portfolios accordingly, while still making sure that my clients can benefit from the growth.
Below is a summary by one of our highly quality investment team, The RBC Portfolio Advisory Group, on the economy and capital markets:
- Markets are close to their all-time highs
- US unemployment is at historically low levels of 3.8%
- U.S. economic growth has moderated but still resilient
- Headlines and markets are still looking for the Fed to cut rates
- Inflation levels are still historically and relatively quite low
- We will see growth soften, however a “soft patch” does not equate to a recession. The recession risk is low for the 12 month horizon.
- Corporate profits are decelerating but still positive
- Valuations have recovered from the December lows
- Key risks to market currently are: Will China sustainably reflation? How long will the Federal Reserve continue to err on the side of caution?
For more details on this latest commentaries, or to read our other reports, please click on the link below.
https://ca.rbcwealthmanagement.com/najia.crawford/global-market-commentary
Yours truly,
Najia