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October 9th, 2015

Market Brief

By PRATTE

Hello everyone,

We have experienced within the last few weeks, an exceptionally high level of volatility. Compared to the last corrections, the Ebola crisis or even the closure of the US government, we quickly notice that volatility has reached peaks of nervousness that we had not seen since 2011.

Early in this crisis, we anticipated a V-shaped correction, similar to what we have experienced in recent years. However, this time, our risk management parameters have been shaken and our alarms were triggered which resulted in a liquidation of a series of positions within our portfolios, mostly Americans and US denominated stocks.

One of the factors motivating our change in our asset allocation strategy is the movement in the US dollar. It has reached our target prices and we do not anticipate further gains on a short term basis.

According to our beliefs, oil prices which have been a negative for our Canadian currency is presently oversold. A rebound in energy is possible and would have a positive impact for our Loonie. That being said, we believe that this situation will be short lived and for increased protection, we still reduced our exposure to the US dollar.

On markets

Even if all US indices are technically weak, it does not necessarily mean that we should liquidate all securities. We will rather increase our awareness by being more careful and selective in our choices and strategies.
We are continuing to use the same investment theme; we are changing and modifying our asset allocation by reducing the allocation to stocks particularly shares denominated in US dollars.

After avoiding Canadian securities and currency, we will quietly rebuild our exposure to our Canadian market. We will begin with energy that provides protection to our US dollar exposure. We hope that the energy sector will enter a period of consolidation and that interesting opportunities arise. If this were to happen, we would already be invested and will fully enjoy the benefit.

Despite the market rebound of the recent days, we will continue to keep higher liquidity and cash than usual. We are still concerned about the strength of this rebound. We are less aggressive than we were to take position in the market. We expect and need more strong confirmation signals to allocate our cash.

Stay tuned, we have great news for you shortly.

See you soon!

Philippe

 

Canaccord Genuity Wealth Management is a division of Canaccord Genuity Corp., a Member of the Canadian Investor Protection Fund, the Investment Industry Regulatory Organization of Canada (IIROC) and the Toronto Stock Exchange (TSX). Independent Wealth Management advisors are registered with IIROC through Canaccord Genuity Corp. and operate as agents of Canaccord Genuity Corp.

This newsletter is solely the work of the author for the private information of clients. Although the author is a registered Investment Advisor at Canaccord Genuity Corp., this is not an official publication of Canaccord Genuity Corp. and the author is not a Canaccord Genuity Corp. analyst. The views (including any recommendations) expressed in this newsletter are those of the author alone, and are not necessarily those of Canaccord Genuity Corp.

The information contained in this newsletter is drawn from sources believed to be reliable, but the accuracy and completeness of the information is not guaranteed, nor in providing it do the author or Canaccord Genuity Corp. assume any liability. This information is given as of the date appearing on this newsletter, and neither the author nor Canaccord Genuity Corp. assume any obligation to update the information or advise on further developments relating to information provided herein. This newsletter is intended for distribution in those jurisdictions where both the author and Canaccord Genuity Corp. are registered to do business in securities. Any distribution or dissemination of this newsletter in any other jurisdictions is prohibited. The holdings of the author, Canaccord Genuity Corp., its affiliated companies and holdings of their respective directors, officers and employees and companies with which they are associated may, from time to time, include the securities mentioned in this newsletter.

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