Risks lurk as RRSP season approaches
Investors wary angry Trump tweet may hit their holdings
As investors head into RRSP season this year, stocks in Canada and the United States sit at or near record levels, but tensions are rising and that could mean volatile times for the markets.
Before the U.S. presidential election, many had predicted that a Trump win would send stock markets crashing. But the reverse happened. Markets cheered the election of the real estate mogul and charged ahead in the weeks following the vote. But the reality of the Trump administration has started to sink in and investors are becoming wary about what an angry tweet can do to their holdings.
Jurrien Timmer, director of global macro at Fidelity Investments, said Americans elected a “disrupter” and with that, the “game has changed.”
“Since the 2009 bottom, post-the financial crisis, price has outperformed earnings in a very big way,” he said.
“The question is, ‘What are people going to be willing to pay for those earnings if we are faced with political and policy uncertainty?”’
Timmer said he expects the U.S. markets will do well because earnings are expected to grow, but the risk from uncharted political waters may mean that stock prices might not keep up with a rise in corporate profits.
Instead, Timmer is looking to European and emerging markets.
“I am increasingly of the opinion that the opportunities in 2017 are going to be outside of the U.S.,” he said.