2018 Market Review, 2019 Perspective

2018 Recap

At the beginning of 2018, could anyone have imagined as the year would unfold that Canada would be considered a “national security threat to the United States”, and consequently have US tariffs imposed on our steel and aluminum exports?
Would anyone have guessed that the controversy surrounding the Trans Mountain Pipeline would instigate it’s purchase by the Canadian government from Kinder Morgan for $4.5 billion?… only to then have the Canadian courts ban its construction, which would in turn accelerate Alberta’s economic slowdown.
Was it possible to foresee the arrest of Huawei CFO Meng Wanzhou, the US extradition attempt, and the economic and political circus that ensued?
The US government shutdown & rejection of the Brexit agreement, amongst many other extraordinary events, do also merit honourable mentions on this list of major events that impacted markets in 2018.

Though an unfortunate reality, it appears the unpredictability of geopolitical risk is here to stay.  It is impossible to forecast and even more impossible to anticipate market impact. But effective wealth management doesn’t rely on guesses or impulsive reactions to geopolitical drama and every piece of news – it relies on strategy.
2018 underlined this importance:  a properly diversified, quality portfolio is fundamental for stability and the achievement of long-term results.

* SOURCE: Thomson Reuters Datastream

2019 Outlook

So far in January, we’ve witnessed an incredible rebound in 2019, erasing the majority of losses incurred last year. On average, a positive performance year usually follows a negative return year, however, it’s too early for conclusions.
We tread with caution, but not fear; and while we remain prudent, we are optimistic for 2019.
The full economic impact of increased interest rates requires observation, as does the China/US trade discussion. Also to keep in mind, we are in the 10th year of an economic expansion, an historical upper limit.  That said, following the recent correction, global markets are very reasonably priced.  Most economic indicators are still positive. And while our strategists do anticipate some slowdown in global growth, they see only a low probability of a recession in 2019.
While we will actively search for investment opportunities that will add growth potential to our portfolios, in 2019, we are extremely sensitive towards protection against downward risk.

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