Risks lurk as RRSP sea­son ap­proaches

In­vestors wary an­gry Trump tweet may hit their hold­ings

Metro Canada (Vancouver) - - NEWS | BUSINESS -

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.

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