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Economic recovery is nigh, says the latest report by the Bank of Canada, and a textbook investing strategy is justified.
Stock markets tend to rise in the early stages of the economic cycle until investors start thinking about tighter monetary policy.
We are currently in the sweet spot of that cycle, and investors should follow the textbook play and reduce cash, increase exposure to more cyclical sectors and work their way down the capitalization ladder on market weakness.
Monetary stimulus is greasing the squeaky wheels of finance, and there are many positive developments in the Canadian economy over the past three months.
Short-term funding for banks is reverting to normal, household credit is growing, commodity prices have recovered, and financial conditions are improving.
There are sectors that are more cyclical and economically sensitive such as consumer discretionary, financials and resources, and there are defensive areas where revenues are more insulated, including health care, telecommunication and utilities.
Read the full article here.
Stock markets tend to rise in the early stages of the economic cycle until investors start thinking about tighter monetary policy.
We are currently in the sweet spot of that cycle, and investors should follow the textbook play and reduce cash, increase exposure to more cyclical sectors and work their way down the capitalization ladder on market weakness.
Monetary stimulus is greasing the squeaky wheels of finance, and there are many positive developments in the Canadian economy over the past three months.
Short-term funding for banks is reverting to normal, household credit is growing, commodity prices have recovered, and financial conditions are improving.
There are sectors that are more cyclical and economically sensitive such as consumer discretionary, financials and resources, and there are defensive areas where revenues are more insulated, including health care, telecommunication and utilities.
Read the full article here.