Outlook for March 2018

The first tremors are appearing in the stock market, with volatility making a huge comeback. Earlier in Feb, the market saw a correction and volatility jump after being depressed to record levels for years. Of course, shorting vol was something that traders were taking lightly ignoring the risky nature, and has wiped out their working capital overnight.

Turning a more wider view, the new Fed chair has taken command and it appears that he is taking a different approach.  As I mentioned in my Outlook for 2018 post, the US$ will be the most interesting asset to observe in the investing universe. The moves are already pretty apparent as the slide has accelerated since the start of the year. The US budget deficits are getting more media attention, the US government saw a brief shutdown — only to kick the can down the road for a short while, interest rates are rising while the currency is sliding — the US market is now behaving like an emerging market!! These are interesting times, no doubt. I will be keeping a very close eye on the US$ and continue to position myself to protect my purchasing power as the world’s reserve currency continues down the devaluation path.

Outlook for March 2018

With the slide of US$, we can expect to see asset prices starting to inflate. Assets such as US stocks have already been inflated over the years, but there are other places where opportunities exist. The biggest opportunity lies in the commodities market (hence my oversized exposure to the Basic Materials sector). Some other areas that provide good investment opportunities include: International markets (non-US equities), non-financial assets that can benefit from sliding US$ such as REITs, pipelines (i.e., real assets/infrastructure plays) etc, and Value-focused plays (the Value-factor has underperformed compared to Momentum-factor for almost a decade now!). The following chart was put together from Bank of America as to what the 2018 rotation is expected to look like. I don’t agree 100%, but definitely agree enough with the outlook to warrant a share. You can read more details about this BofA call here.

As of Feb-28-2018, our overall portfolio diversification is structured as shown below.

Looking for investment ideas? Check out this Top Investment Picks for 2018, where 35+ bloggers present their top pick and a reason to invest in those securities.

What are your thoughts on the points mentioned above? Do you have any specific thoughts on the markets and looking at anything interesting? Share with a comment below.

Full Disclosure: Our full list of holdings is available here.

8 thoughts on “Outlook for March 2018

  1. JC says:

    Interesting times indeed and it looks like March is getting off on a shaky foot. I definitely wouldn’t mind upping my exposure to some commodities. Currently apart from oil I have some small positions in GDX and GDXJ.

    • Not a bad place to be, JC. I have too much gold and silver miners if I say so myself. But the sector is hated so much, I couldnt stop buying. Now, with some great returns — its grown to almost 1/2 my portfolio, so looking to sell slowly as I see them rallying even more. Interesting times indeed…looks like Powell has brought some vol with him 🙂


  2. Great writeup. Clearly the precious metals sector is starting to respond. The debtload is always a concern as they keep sweeping it under the rug for future leaders…..

    I dont see interest rates going that high for this reason. With the new proposed tariffs on canadian steel and aluminum are you selling any of your holdings?


    • The debt load should be a massive concerns on all fronts. When the next financial storm hits, there wont be too many places to hide.

      No steel or aluminum holdings in my portfolio, so I dont think theres any direct impact on me. This might be an underhanded way to devalue US$….interesting move by the US.

  3. I was wondering about that large exposure to commodities and materials in your portfolio, but sounds like it’s more a function of strong returns. I’m very surprised at the Value vs Momentum under-performance for such a long period! What do you reference for that data?

    No doubt they are interesting times – so hard to see how it will all play out with the combination of low interest rates, big debt levels, high equity values and currency movements. Times like these I’m glad I’m not an economist being asked to predict the future…

    • Hi FFF,
      Yes a lot of it is because of the returns Im enjoying. Last few months, I have sold off some of my positions and still sitting close to 50% in overall portfolio exposure, which is a bit too much for me. However, the valuation is pretty attractive compared to other sectors of the economy.

      I cant remember where I saw the Value-vs-Momentum, but there was some interesting data to see how things lagged. Also heard it on a few podcasts lately. I will have to see if I can dig up the data and share it.


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