Navigating Volatility: Positioning Portfolios in Today’s Market

Interviewer: 
Joining us now to talk markets from Harbourfront Wealth Management is portfolio manager Wes Ashton. Well, Wes how would you characterize the current market environment, and what are the key forces driving performance right now?

Wes Ashton:
yeah, I, I think if I was to describe the markets, it would be unsettled and lack of clarity given what's going on in the Middle East right now. that's really what's truly driving the direction of the markets today. and I think we've seen that actually in the last couple of days when we've had some positive news about a potential ceasefire or, perhaps an agreement, markets have reacted quite favorably and have posted positive numbers over the last couple of days.

Interviewer:
Unsettled is a good way of putting it, and building on that, with ongoing volatility across asset classes, where are you finding the most compelling opportunities for investors today?

Wes Ashton:
Yeah, I think it's important right now as opposed to making irrational decisions based on emotion of some of the media that we're seeing is actually to take a more pragmatic approach and, and be diversified, so long as it's in line with your time horizon and, and risk tolerance. And I say this because it's really difficult to predict what's gonna happen here in the short term. So as an example, if somebody's taking advantage of the spike in oil like we've seen over the last four weeks, you know, we get some of this positive news, and we see a significant retreat in a short period of time. So it is tough to, guess on what might happen in the short term. So again, I would focus on quality of companies that meet your investment criteria.

Interviewer:
How should investors be thinking about diversification in a market where traditional correlations have been less reliable?

Wes Ashton:
Yeah, I, I think, you know, there's the traditional, you know, one to two asset classes that most Canadians subscribe to. I think thinking outside of the traditional two, which is stocks and bonds, and thinking about alternatives are, are important. So adding, you know, five to six asset classes versus one or two. Those alternative asset classes can also be things like precious metals or commodities or what have you. So I think the broader you can be, the better. and what that really does is some people might say, "Yeah, but if you're too diversified, you miss, you know, more of the upside." I think today it's about managing the downside. I think that's really what's critical especially with this ongoing conflict in the Middle East. I think it's best to kind of wait and see and still participate if things go up. But at the end of the day, if we do get a prolonged period of uncertainty, you're protecting what we've earned over the last couple of years.

Interviewer:
Now, how are you factoring in interest rates, inflation, and other macro factors into your market outlook?

Wes Ashton:
Yeah, it's... that's the... I think that's the million-dollar question, Jenna. It's, you know, what's gonna happen with central banks both here in Canada and the US. In Canada, it's a little bit different. I think we're in the late stages of interest rate cuts. and our inflation, it hasn't been quite as sticky as what it's been in the US. We heard that last week from the US Fed. they're really trying to figure out what direction you know, not only trade policies and tariffs are having on the inflation numbers, but also what's happening in the Middle East, you know, with the spike in oil prices. It- it's all filtering down into goods and services. So I think it's, again, a little bit of a wait and see moment. We would like to see interest rates come down in the US, but we don't anticipate them moving here in the short term. So like I said, we're just kind of hanging tight until we get more clarity on a go-forward basis.

Interviewer:
As we look ahead, Wes, what risks are you watching most closely, and how should investors position portfolios to navigate those concerns?

Wes Ashton: 
What I've been saying to our clients is we see two markets right now, one that's fundamentally driven and one that's event driven. And so when we look at it from an event driven standpoint, you know, obviously what's going on in the Middle East can actually move markets quite quickly. But coming into this year, we actually thought, you know, from a fundamental point of view, the economy and the markets were on pretty sound footing. We had back-to-back quarterly earnings that came out, especially in the US, that were stronger than the historical numbers. So we actually thought coming into this year it would be decent. So again, if this conflict, if we do get a resolution here sooner than later, we think things will revert back to the means revert back to fundamentals, and I think there's some great opportunities in the market. We've seen some contractions on good quality companies, especially in the growth sectors. You know, Microsoft, you know, dipped below its 200-day moving average. We haven't seen that in decades. so there is definitely some quality investments, quality names out there that people can selectively start picking up for their portfolio. So I think quality over, over anything is the key driver right now.

Interviewer:
Well, we better leave it there. Wes, thank you so much for being with us today. And thank you to everyone out there watching. Once again, that was Harbourfront Wealth Management portfolio manager Wes Ashton, and I'm your host, Jenna Dagenhart, with Asset TV.