Here Comes The Volatility

Sell in May? (and go away).

An age old market and trading cliche which I have discussed here before. Perhaps the uncertainties that are piling up are finally coming home to roost:

• Interest rates: Will the Fed push rates higher in June?
• Oil Prices: Higher? Lower? Sideways?
• The US economy: higher employment, higher inflation and slow growth.
• Geo-politics: Trump as Republican candidate, Brexit, Russia, China, Greece, Saudi Arabia, Iran, North Korea, Terrorism, Refugee Crisis...
• Negative yields in Japan, Europe
• Expensive stock markets, declining earnings
• Low returns

Certainly a good deal of things to keep us on our toes in the world of managing money and getting reasonable risk-adjusted returns.

Risks are high and rising and it is a time to think defensively when it comes to portfolio management (something that we have been doing since last May at High Rock):

Higher than normal cash holdings.

Lighter than normal weight in risk assets.

More government bonds.

Volatility will bring opportunities to those who are patient.

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Your feedback is always welcome: scott@highrockcapital.ca

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