Buy quality in volatility

Chief Investment Officer and founder of Aitken Investment Management
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The ONLY certainty next year is VOLATILITY. With the combination of populist political leaders and less “monetary policy morphine” from Central Banks, the ONLY outcome can be volatility.

I think November gave you a taste of things to come in 2017. In November, Donald Trump was elected President of The United States of America and the market implied chances of a 25bp rate hike from the US Federal Reserve moved to 100%. The result was unprecedented short-term volatility and major sector and stock performance divergence.

It’s worth remembering that at one stage in November, US equity index futures were halted limit down (-5%), in fact, the US S&P futures traded in a 9.3% range during the month. Kerb trading kicked in which only happens in periods of extreme duress. I’ve only seen US futures limit down three times in my 23-year career. However, less than 24 hours later, all those losses had been eradicated and capital losses started stacking up in bond markets.

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