Dislocations in oil markets and the Chinese and U.S. economies are among the economic gaps driving today’s instability. At the same time, recent declines may offer good entry points for far-sighted investors who’ve been on the sidelines. So, how do you best position your portfolio right now?
What should you expect?
The Chief Investment Office Wealth Management Research (CIO WMR) has identified five major gaps that investors need to watch. Until there are signs that many of these are starting to close, market uncertainty is likely to continue.
- The gap between a growing services industry and a declining manufacturing sector -- will reveal the most to investors in how the gap closes
- Rising oil supply vs. decreasing oil demand -- should create volatility until oil prices find a floor
- Currencies’ pegged to the USD vs those pressured by market forces -- will be a good indicator of the direction of capital flows
- A united vs. a divided Europe – will reveal fusions or fissions on issues like immigration and most importantly, the possibility of a British exit from the Eurozone or ‘Brexit’
- The gap between the Fed’s hike plans and market expectations should reveal a good indication on the direction of the U.S. economy
What should you do?
CIO WMR recommends refraining from actively selling out of equity positions, maintaining “normal” levels of risk in your portfolio and—assuming a long time horizon—considering putting large cash positions to work.
Join us as Mike Ryan, Chief Investment Strategist for Wealth Management Americas, leads this fully interactive discussion featuring the latest on our market views and investment strategy guidance on the first Thursday of every month at 1:00 p.m., ET / 10:00 a.m., PT.
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*The views expressed on the call do not constitute a personal recommendation or take into account the particular investment objectives, investment strategies, financial situation and needs of any specific individuals. They are based on numerous assumptions. Different assumptions could result in materially different results. We recommend that you obtain financial and/or tax advice as to the implications (including tax) prior to investing.