May 2017 Market Watch

Posted 01 May 2017 by Melissa Allan; Patricia Bell, PFP


Concerns about the future of North American trade regulation and tax reform are growing along with those in Europe which creates some uneasiness among investors. Keep your eye on the ball.

 Melissa Allan

In my opinion the biggest market concerns at this time are currency and asset allocation.  There are various obstacles in every part of the world to consider!  The upcoming U.S. legislation changes, the potential political shift in the global markets after elections in the core European countries and the many headlines affecting the Canadian market such as housing, NAFTA and historically low interest rates.

All of the fund managers we work with continue to find opportunities within the market and re-balance their funds on a regular basis. They recognize that moments of change allow for opportunities within the market. We have always preached the importance of a well-diversified portfolio and will continue to do so.

 

 Patricia Bell, PFP

I’ve recently returned from two days with key Fidelity Portfolio Managers who shared overviews of their investment processes, often emphasizing the importance of maintaining a disciplined and consistent investment approach during market uncertainty.

When asked about their market outlook, several speakers mentioned the need for clarity regarding the proposed policies of President Donald Trump, as well as concerns about growing trends of populism and anti-globalization movements. Despite some caution, however, they are finding opportunities for positive market movements.

Bruce Johnstone, Managing Director and Senior Marketing Investment Strategist, believes things could be different in the Trump Era. He noted that President Trump has rejuvenated business and investor confidence, but that a key question remains: Can this lead to improved economic growth? Bruce believes that if President Trump can successfully implement his policies of deregulation, tax reform and fiscal stimulus, economic growth could be pushed higher. However, President Trump’s anti-trade and protectionist rhetoric could represent a counteracting brake on economic growth.

Despite the risks that investors are facing, Bruce feels that the U.S. remains a fundamentally resilient place to invest. The main takeaway from his presentation was that while there is never any shortage of things to worry about, the underpinnings for long-term growth and optimism far outweigh the real and potential risks.

Portfolio Managers Dan Dupont, Mark Schmehl and Ramona Persaud all emphasized the importance of managing downside risk. I’m sure you’ll remember me opining that minimizing losses when markets aren’t doing well helps protect your capital. This leaves more of it to compound when markets rise again.

As always, if you’d like to discuss these strategies in more detail and how they impact your portfolio, don’t hesitate to get in touch.