Tariffs and Time

Hi All,

I want to address the very important situation we are in with the USA tariffs and our position on this, along with what I am doing.

While many of us are very frustrated by this news it has become a reality, for now. I have said prior I would act on issues as they became real and continue to hold that true. That said, as tariffs were confirmed yesterday, I took a small position out in VST (previously EPR) and moved it to VXX. This is a volatility tracker that is intended to buffer in downside markets. As we got nowhere last night and tariffs were further confirmed today, another position, LYFT was removed to add more VXX. 

I am not panicking and nor should you. This is not the first market correction we have been through and will not be the last. This is a tactical move to get a result we are yet unclear on. It is not the end of the market or world, and money will flow back to assets once it gets resolved. I must remind you that nothing is lost unless a sell is made, and the asset is sold. If we hold them and be patient, we will be much better off than panicking and running to the hills. I will make changes as more information becomes available daily. For example, energy looks like a future challenge. I may address that next and find better solutions with select assets.

We are all very confused as to the endgame of these tariffs, but this too will pass as negotiations continue and issues get resolved. I am not sure if this will be resolved in days or weeks, but I will continue to adjust as more details and FACTS are laid out. The auto industry, and many other manufacturers, will not just stand idly by while their businesses are destroyed by cross-border tariffs. 

The main reason I made the recent moves I did today is that President Trump has a speech tonight and I am quite sure there will be nothing positive today until he addresses Congress tonight: What time is Trump's address to Congress tonight? Yahoo News. Hopefully we get more clarity on his desired outcome with tariffs and Ukraine, but I will not hold my breath, either.

I see this as another buying opportunity. I do not have any clients with a 1–2-month time horizon that I know of, lol. Please remind yourself of that. The typical investment (unless it is for things like school or a home) is meant to last through our lifetime. Do any of you want to reduce that timeline to 1-2 months? I think not, so let's stay focused!

I will continue to adjust, as needed. In the meantime, the retirees live off the cash and dividends we have set aside for reasons just like this, and the rest of us get more positions cheaper from dividend reinvestments or new buys. We are not naked to the market and do not need to sell assets into any correction. I have explained that in-depth to many, if not all, of you. We do not just own all mutual funds and sell units to give retirement income, this sets us apart from a majority of other institutions. I have set up buffers for retirees and would encourage younger folks to buy more.  It was not long ago we were at al-time highs and the celebrations were many and I cautioned many that it will not last forever. Here we are. Another pothole on the road that we are trying to pave. We will get by it, too.

 When we invest in equities we have fantastic years, like the last few, but do have a bit more volatility than using cash or bonds. I believe I have shown you all this chart:

Risk & Return in Equity/Treasury Allocations

Source: CIBC Asset Management

There is not one spot there where 100% equities did not outperform long-term investors. It is a 45% higher rate of return to be 100% equities than 60/40 stocks and bonds over 20 years. Stay focused. I continue to work on both sides of that equation to try to mitigate loss, without locking it in and then trying to buy assets back higher later. 

Cheers,

Steve

This information has been prepared by Steve Switzer who is a Portfolio Manager for iA Private Wealth Inc. and does not necessarily reflect the opinion of iA Private Wealth. 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. The Portfolio Manager can open accounts only in the provinces in which they are registered. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.