I will greatly appreciate your thoughts on my thinking process as I construct my portfolio for this year. I would like to know how closely your thinking aligns with mine and what would you do differently.
I am a retired senior, not risk averse yet mindful of the necessity to curb excessive enthusiasm. I like to think I keep the risk to reward tilted towards the latter.
My thinking goes like this. I expect the Canadian economy to go through a mild recession or at best ride the US economy to <= 1% growth. Hence, I want to allocate 30% Canada and 70% US (including marginal international through ETFs).
I feel that since interest rates have peaked, the stock market should return higher than historical average this year. I think the allocation should be 20% income, 25% balanced, 30%growth,10% investor suite and 10-15% trading opportunities. I think that automated AI/technical based trading software will have a larger presence, making the market a little more volatile and provide with trading opportunities.
I also think that more interest rate cuts in Canada than the US, the income portfolio should be all Canadian. High yielding stocks should provide capital appreciation as well in this environment.
I am not considering Shopify and CSU as part of a portfolio. I already own them and they are qa significant part of my assets. Any adjustment will have significant tax consequences. If required I will take decisions independent of the portfolio.
I look forward eagerly to your feedback.
Regards
Rajiv
We would agree with most points here. The Canadian economy IS weaker, and rates will likely fall faster here than in the US. Income stocks should do well. There is a risk that recession-sentiment hurts returns, but we would not really expect a deep recession in Canada considering US strength and interest rate cuts there also. We do think the US market will outperform again. Asset allocation needs to be personal but we would have no issues with the proposed set up. We may not see 'more' AI trading as quantitative trading has always been a factor in adding volatility anyway. The year will likely play out OK: rates are dropping and corporate earnings are rising, which are the main factors. International markets have been very weak BUT.......if overall confidence returns then they potentially could be outperformers. But we would see no real need to have a big international weighting for a more-conservative investor. Small/mid caps 'should' also do better, but the same comments would apply.