BPIC Global Markets Commentary - December 2022
Relief for stocks and bonds, heartburn for crypto and social media
Our Strategy – Solidly balanced
- We held steadfastly to our asset mix in November. With stocks and bonds delivering gains, our slight overweight to equities and meaningful allocation to fixed income were rewarded. We believe it’s still appropriate to stick reasonably close to our long-term strategic benchmarks – with some prudent tactical tweaks. In turbulent times, a well-balanced, solid foundation is the best place for investors.
- Lower long-term bond yields may represent a near-term overcorrection. By and large, the fixed income market has adjusted to reflect the likely path ahead for growth, inflation, and future central bank actions. In our bond portfolios, we are reinvesting the coupon income and maturing securities to achieve higher yields. If there is a recession, we believe our bond positions will provide a level of safety.
- We remain slightly overweight equities. Our geographic alignments reflect where we see the best risk-adjusted opportunities. We are underweight international developed markets (primarily Europe and Japan) and overweight to North American equities. Canada’s commodity-related companies do well in inflationary environments. U.S. equity markets and the U.S. dollar have historically offered relative safety when global growth is weak.
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