Caerus Wealth February Commentary
As the Coronavirus continues to spread, the World Health Organization raised its impact risk alert to “very high”. It’s difficult to filter through the influx of information coming from various parts of the globe but it is becoming clearer that this is likely a pandemic and will affect nearly all parts of the world which will have a significant impact on the global economy. Over the last 5 trading days, the S&P500 has lost approximately 11.5% with the TSX Composite Index losing approximately 9.56%. The velocity of the sell-off has been directly tied to the speed at which the Coronavirus has been spreading and its unknown economic impact. This is a good reminder of how sensitive the market is and the importance of having an active approach to managing the unexpected risks.
As your portfolio managers, we take pride in managing your money and allocating your savings with the proper mix of investments to achieve the best outcome possible. Within that scope, we take solace in having a defensive process model that is designed to protect your capital during high impact events such as this one.
Caerus Private Wealth Portfolios
On Friday, Feb 28th, we sold some positions in the portfolios that have breached our metrics resulting in an increase of cash reserve. We will continue to monitor the global spread of the virus over the weekend, and if necessary, we will make more defensive trades next week. In the event of increased volatility, its imperative that we protect the bulk of your capital. Please note that we are not timing the market and are simply following our protocols. Our goal is to, not speculate, use subjective rationalization to make decisions during volatile times ultimately mitigating capital erosion remaining disciplined and sticking to our reliable process.
In addition, we will be raising the percent allocation of our ‘Alternative Investment’ sleeve in our portfolios to 40% across our models. In our ‘Balanced Models,’ there will be an increase of 12% and in our ‘Balanced Growth’ models, there will be an increase of nearly 12%. We continuously monitor the Alternative holdings and we believe that by increasing the weights in your portfolio it will add value by reducing stock market volatility while maintaining a healthy rate of return.
Overshadowed by the Coronavirus pandemic, the February race for the Democratic nominations surprised many North Americans as Senator Bernie Sanders has taken a big lead over the other candidates with his decisive victory in Nevada. His reformist ideologies will certainly keep Americans at the edge of their seat with the upcoming South Carolina primary this Saturday to be followed by Super Tuesday and the string of primaries across the United States which will cover nearly 38 percent of all delegates. It is too early to tell but if Sanders continues his momentum, he will take the Democratic nomination for the presidential race against Trump.
As your trusted Portfolio Managers, Caerus Private Wealth and its team are available to address any questions you may have. Stay safe!
Terry Fay, Director, Private Client Group, Portfolio Manager
Kian Ghanei, Director, Private Client Group, Portfolio Manager
Caerus Private Wealth – HollisWealth, a division of Industrial Alliance Securities Inc.
700 – 609 Granville Street, Vancouver BC V7Y 1G5
T: 604.895.3316 | TF: 1800.665.2030 | F: 604.682.0529
terry@caeruswealth.ca | kian@caeruswealth.ca
holliswealth.com | caeruswealth.ca
This information has been prepared by Terry Fay and Kian Ghanei who are Portfolio Managers for HollisWealth® and does not necessarily reflect the opinion of HollisWealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. Terry Fay and Kian Ghanei can open accounts only in provinces in which they are registered. HollisWealth® is a division of Industrial Alliance Securities Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.