Inside this month’s commentary:
1. Q1 2017 Market Wrap: http://www.bnn.ca/weekly-with-andrew-mccreath/andrew-mccreath-s-market-wrap~1091187
2. Factors that will drive portfolio positioning
3. Portfolio changes and attribution
Having a background in the music business, I have a keen ability to keep track of “records”. However, during the month of February, my mind was blown away by the number of records being achieved on Bay and Wall Streets. Up until and including Feb 28th we had 50 straight trading days where the S&P 500 had not moved 1% or more, up or down; and then indices broke out on March 1st (after Donald Trump’s speech). If one looks back historically to when we have had long streaks (50 days +) of subdued returns (< 1%) with an upside breakout as we experienced on March 1st, it gets pretty interesting. In other words, if history is a guide, markets may experience a high degree of volatility in the near future.
As I outlined in our December 2016 commentary, I believed a lot of good news would be priced in the market by the time Trump took office on January 20th. Thereafter, reality would set in – the impact of the rising US dollar, clarity into what policies the new President would (or would not) be able to deliver upon, and renewed focus on the potential risks around the globe. For example, Trump talking tough on China and Mexico while cooing softly with Russia. As of January 31st, we still have no idea how these theatrics will play out; hence, markets are signalling a move from “Animal Spirits” to “wait and see mode”.
Happy New Year! I am excited that a new calendar year is underway for some of the following reasons:
a) During 2017, the Forge First funds will achieve five-year return numbers.
b) 2016 marks the 4th consecutive calendar year of positive net returns in our funds since August 2012 inception.
c) Signs are pointing to a market where active management will add value relative to passive investing. Having the ability to offer investors the advantage of a proven shorting strategy heading into a year of macro challenges will be significant.
Looking back, 2016 was a year that featured four mini-cycles: the risk-off panic of January, the reflation rush of February through April, and a reversion towards a more balanced market from May to August, followed by a rotation among equities winning or losing from rising interest rates from Labour Day through year-end...