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Global Asset Allocation Update: Tariffs Don't Warrant A Change... Yet

Joseph Calhoun profile picture
Joseph Calhoun

By Joseph Y. Calhoun

There is no change to the risk budget this month. For the moderate risk investor, the allocation to bonds is 50%, risk assets 45% and cash 5%. We have had continued volatility since the last update, but the market action so far is pretty mundane. The initial selloff halted at the 200-day moving average and the rebound carried to just over the 50-day moving average. That is about "as expected" as you can get for a stock market correction. We did have another bout of selling that was halted above the initial low and that too is pretty classic market action. All in all, what we've seen over the last month is a textbook case of a correction. At least so far.

While the overall allocation is unchanged, there are changes to the composition of some of the asset classes. Momentum is part of our process and we are trying to take advantage of it where we can while maintaining a well diversified portfolio.

One of the most common investor mistakes I see is allowing your political views to color your investment process. How many Republicans let their dislike of President Obama affect their portfolio decisions? How many Democrats have let their opinion of Donald Trump and Republicans more generally impact their asset allocation? Politics, especially in more recent times, is an emotional experience with many people today viewing almost everything they do through a political lens. I think that is to our society's detriment but that's a topic for another day. When it comes to investing, emotion is your enemy and that means politics needs to take a backseat when you start thinking about how to achieve your financial goals.

President Trump announced last week that he would be implementing tariffs on aluminum and steel

This article was written by

Joseph Calhoun profile picture
Joe has worked in the financial services industry since 1992 in various capacities, including Operations Manager, Compliance Manager, Registered Representative and Portfolio Manager. From 1997 to 2006, when he founded Alhambra Investment Management, Mr. Calhoun was a Director of Investments at Oppenheimer & Co. Mr. Calhoun holds the Series 63 (Uniform Securities Agent State Law) and 65 (Uniform Investment Advisor Law) securities licenses. He has previously taken and passed the Series 7 (General Securities Representative) and Series 9/10 (General Securities Sales Supervisor) securities exams. Joe proudly served in the U.S. Navy’s nuclear submarine service for 8 years (1983-1990) and was awarded several commendations including the Navy Achievement Medal in 1987. He studied engineering at the University of South Carolina and is a graduate of the U.S. Navy’s Nuclear Propulsion School. He founded Alhambra Investment Management as a registered investment advisory to address the needs of the individual investor. His market commentaries are widely read and published at various online outlets. He has appeared on Larry Kudlow’s program on CNBC and various radio programs. He is also an editor of the website RealClearMarkets.com.

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