Investment Conditions in Trumpenomics!

January 9, 2017

 

CDN$ gained 1.56% against the US$ last week BUT is still in a downtrend.  The gains were partially due to higher oil prices BUT CND$ does seem to be moving more and more based on interest rate differences in Canada and the United States.  Interest rates are expected to (and should) move higher and faster in the United States resulting in weaker CDN$.

 

GOLD BULLION rose last week BUT is well off its highs of the last year.  ‘TRUMPENOMICS’ (if policies enacted) should lead to higher inflation (which is why government bonds yields have moved higher) and GOLD BULLION is ‘believed’ to provide protection from inflation. SENTRY GROWTH & INCOME has a dedicated position in gold/gold bullion but most clients total allocation is in the 1-2% range.  For ‘protection’ from inflation (and perhaps from equity market correction) clients could increase their gold weighting by 3-5%.  I see a short term resistance for GOLD BULLION @ the 1225-1250 range or about 6% higher than current levels.

 

Volatility and/or market corrections are always a concern and for those wishing to protect their equity positions and reduce the effect of a market correction I suggest owning VOLATILITY as represented by the VIX (it is currently CHEAP).  This index which often referred to as the ‘fear gauge’ will often move higher as the markets move lower or are anticipated to move lower.  My suggestion for those with portfolios OVER $100,000 is to reduce your fixed income position by 5% (it is paying very little anyway) and take a position in the VIX.  This index can often DOUBLE when fear strikes the markets helping to offset the inevitable drop in equities & higher yielding bonds.  The cost for this protection strategy is minimal as the returns on investment grade bonds is minimal.

 

Please call the office or send me an e-mail to discuss whether any or both of these strategies are appropriate for your investment goals and time horizon.

 

(If interested ask for my most recent individual stock selections for GROWTH or INCOME)

 

 

 

The views expressed do not necessarily reflect the opinion of Argosy Securities Inc. This does not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. Please consult a professional before making an investment decision.

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