It feels like Mother Nature is trying to tease us with a taste of spring warmth and then blasting us with snow! It's a bit like our markets these days. We suffer/delight through the daily fluctuations in the market and the volatility seems to be here to stay. However, we are getting used to it because like the wild Minnesota March weather we know that on the other side is the long term reward for being patient and thoughtful about our investment plans.
So what has Caissa been doing??
There was a lot of talk about recession, interest rates and oil this month. Oil has been starting to calm down and perhaps we feel a floor settling in. The recession discussions started to dwindle as well when 4th quarter GDP was revised upward and now interest rates are going to be the center of conversation for March. During the wild swings in January and February, we were putting as much cash as we had on the sidelines to work to take advantage of the downturn. Just in the last few weeks the markets have rebounded so it proved to be a good move. We spent a fair amount of time at the end of December harvesting capital losses for tax purposes as we saw extremely large capital gains distributions flowing through. Lastly, in December we paired back our emerging market and natural resources exposure to add to our market neutral (a long/short strategy) portfolio. All of these strategies have proven to be a positive attribute to our allocations thus far in 2016.
Happy Easter and we hope you found an abundant amount of Easter eggs this month!
Rates Go Negative
Japan's central bank-lowered its funds interest rate
Economic growth in several developed countries has recently slowed down as businesses have grown accustomed to low rates. Central bankers hope that pushing rates down into negative territory will help their economies resume expansion.
Take some of your investing lemons and make lemonade
Even portfolios with big gains will likely have some positions that have taken losses over the course of the year. Though a loss may be hard to look at, there is a strategy that allows you to gain a tax benefit from an investment loss.