The news on a daily basis suggest that the world we live in will not be calming down anytime in the near future. This is likely the new normal as globalization and political uncertainty continue to rile the market.
I was recently asked how we might adapt to this new environment. More particularly, if trade issues continue and a recession becomes likely, what might we do in response to change in developments?
Here are a few thoughts
- One needs to be flexible.
- Constructing an allocation on the assumption news bad news is coming is important.
- Investing in companies that have quality earnings and are not speculative provides a hedge against uncertainty.
- Fixed income assets may prove provide some stability in uncertain times.
The longer the trade war drags on, the higher the probability of economic headwinds (including recession). Our best -case scenario is this will not be the case as we do believe there will be a settlement. But one cannot dismiss the possibility that both sides will choose not to compromise. If that’s the case, adjustments will likely need to be made in strategy.
We are watching and analyzing. We will make adjustments as needed. Making sure your portfolio is invested in a way that we believe gives you the highest probability of success.