John Hood, president and portfolio manager at J.C. Hood Investment Counsel Inc.

Focus: Options and ETFs

MARKET OUTLOOK

Whenever there has been volatility, particularly after a sharp correction like in December, it underlines the importance of having a strategy to deal with it. This begins broadly with asset allocation, such as what percentage of equities vs. bonds do I hold in the portfolio. You would be surprised to learn how many investors have no “seatbelt”, which is no or inadequate bond portfolios.

I send my clients a monthly newsletter advising them on what I believe is happening in the market and for early December describing how this market appeared to be a normal correction of 10 to 12 per cent with the S&P 500 down around 2600 to 2650. Well that level was breached down to about 2350 and is now up to at around 2500. I sent clients a follow-up newsletter last week describing what I was going to do in response which was to rebalance their portfolios. Beginning December 21 and again at the opening on Boxing Day I added the Vanguard Value Index Fund ETF ($91.78), a value oriented ETF in USD to portfolios and the Energy Select Sector SPDR ($53.93).

The purpose of rebalancing and buying at lower prices is that portfolios will recover faster. If the market continues to slide I will continue to cautiously rebalance but unless you have a predetermined strategy, investors will flounder.

TOP PICKS

VANGUARD VALUE INDEX FUND ETF  (VTV.N )

Recently purchased on December 26 at $91.78.

ENERGY SELECT SPDR ETF (XLE.N)

Recently purchased on December ​26 at $53.93.

BMO ULTRA SHORT-TERM BOND ETF (ZST.TO)

PAST PICKS:  DEC. 27, 2017

VANGUARD U.S. TOTAL MARKET INDEX ETF CAD-HEDGED (VUS.TO)

• Then: $53.28
• Now: $48.09
• Return:-10%
• Total return: -8%

FINANCIAL SELECT SECTOR SPDR FUND (XLF.N)

• Then: $28.00
• Now: $23.79
• Return: -15%
• Total return: -13%

SPDR PORTFOLIO SMAPP CAP ETF (SPSM.N)

• Then: $30.28
• Now: $26.19
• Return: -14%
• Total return: -12%

Total return average: -11%