May 13, 2019

Protecting Your Investments from a Trade War

This is a short update about what we are doing here at HCM with the trade war dominating the financial news and markets.

First of all, tariffs don’t stop trade, but are a tax on goods which makes the targeted goods more expensive to buy, ultimately slowing down sales. But tariffs themselves are not likely to affect your life much, if at all.

Since we buy four times as many goods from China as they do from us, China has a lot more sales to lose in a trade war than we do. The US is bargaining from a position of strength and over real grievances, but a way must be found to allow the Chinese leaders to save face before a resolution to this problem can be reached.

There will be a delay in the actual implementation of the tariffs announced in the past few days by both China and the US, and my opinion is that there is a good chance of a settlement before the summit of G-20 nations next month in Japan. Pundits say the odds favor a deal before the end of the year.

However, the end of the year is a long way off when your savings is on the line, so in the past few days I have been selling off some investments to raise cash levels in our HCM managed portfolios. I have also added “hedges” (investments that go up when the stock market goes down) to protect the values of remaining holdings.

A week ago, our stock market risk was 92% in our growth portfolios (100% means we are fully invested in stocks) and as of this writing on Monday, May 13, 2019, risk has been lowered to 58%. In case the stock market selloff continues, you can relax knowing that your holdings have Adapted to Changing Markets®, my trademarked style of proactive investment management.

If you are not yet a client of ours, call to arrange a consultation to see if proactive management might help you too.

Best regards,