Oh October!

There is a sea of red for global stock markets this month (far right column). The benchmark All Country World Index (ACWI) ETF is lower by about 10%.

If you are fully invested in a 60/40 globally diverse and  balanced portfolio and dare to look, your equity portion is likely going to be down about 6% (60% of -10%). 

Meanwhile, the 40% Fixed Income portion (as measured by the Canadian bond index (XBB) ETF is little changed:

So you are not getting much protection from bonds. 

If you have some cash / cash equivalent / short-term maturity securities (t-bills or bonds) as our High Rock portfolios have, you have spared your portfolio and yourself some duress. 

In fact, while the stock markets were falling precipitously yesterday, we were picking up some significantly cheaper assets with a little bit of that cash that is in our portfolios. Nothing huge, but just picking away at better value assets.

Interestingly, in the same month that Cannabis became legal in Canada, The Bank of Canada suggested in their October Monetary Policy report (released yesterday) that "the outlook for the global economy remains solid" and felt not only justified in raising interest rates by 1/4%, but indicated that they might be prepared to continue a more aggressive tightening of monetary policy going forward. This left some strategists / analysts wondering if the BOC folks had been enjoying some of those newly legalized treats.

As for the year of 2018 to date, as at the close yesterday, even U.S stock markets (except for the NASDAQ) went negative (far right column):

The All Country World Index (ACWI) ETF has returned a close to -5.5% return:

XBB has added about a -0.75% return:

So a fully invested 60/40 portfolio (year to date) is going to be lower by approximately -3.55% so far in 2018 (don't forget to factor in fees, if you pay them) Most portfolio managers charge between 1 -1.5%. Mutual fund MER's at about 2%, give or take and your fully invested balanced portfolio may be down between - 4.5 to -5.5%.

If it is not, it is because there is some defense built into your portfolio. That is, as they say, is a good thing.