Q: I am a retired investor and am concerned of the current state of the Markets in Canada and US.
While we go back and forth on tariffs one thing is becoming clear, the next four years will be filled with uncertainty and disruption. I am hopeful that common sense will prevail and we can move forward in a positive and productive manner, but who knows!!
Given the uncertainty around the current markets and another deadline in 30 days, is there sectors that you would avoid right now or lighten up on? How should investors prepare for this period of uncertainty?
Thank you
Tim
While we go back and forth on tariffs one thing is becoming clear, the next four years will be filled with uncertainty and disruption. I am hopeful that common sense will prevail and we can move forward in a positive and productive manner, but who knows!!
Given the uncertainty around the current markets and another deadline in 30 days, is there sectors that you would avoid right now or lighten up on? How should investors prepare for this period of uncertainty?
Thank you
Tim
5i Research Answer:
If any tariffs resume, we do think it will be in a smaller format than initially, which mitigates a lot of the risk. While any tariff would not be great or welcomed, Canada can probably handle 10% tariffs. Overall, we don't think a portfolio should be turned upside down because of this. If particularly concerned, raising a bit of cash by trimming some of the at-risk sectors like industrials and discretionary might make sense. Owning USD is likely a good hedge agains this risk as well. We would also note that, despite everything, markets did quite well in Mr. Trump's first term, and a lot of panic in the market right now is probably a bit much considering rates are moving lower and earnings are moving higher.