John De Goey, senior advisor and portfolio manager, Wellington-Altus Private Wealth

FOCUS: Personal finance and ETFs

MARKET OUTLOOK:

This is a dangerous market precisely because major asset classes are seemingly indestructible. Given all that has gone on in the past six months or more, one might reasonably expect things to be worse. Specifically, notwithstanding a fairly strong drawdown in stocks, bonds and real estate so far this year, there are still a number of people who believe a so-called “soft landing” remains a possibility. I am not one of them. 

My own view is that it is merely a matter of time before the many disparate forces weighing down the economy manifest in a larger, more broadly-based drawdown. These factors include high inflation that seems likely to persist above the target range for at least another year, record household debt levels and record government debt levels. Rate hikes like the one we saw last week in Canada will eventually prove to be too much of a headwind for people to overcome with this backdrop. The situation in Ukraine seems likely to produce some high-stakes geopolitical drama as the weather turns cold, as well.

The consideration that troubles me most is the degree to which people are psychologically prepared for a dire turn of economic events, should they manifest. The recency bias of having made it through the mini-crash of 2020 caused by COVID-19 may have created a feeling of optimism and overconfidence that may not be warranted. I fear too many people are prone to optimism bias at a time when they should be turning their attention to being more defensive.

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Horizons ReSolve Adaptive Asset Allocation ETF (HRAA TSX)

Franklin ClearBridge Sustainable Global Infrastructure Income Active ETF (FCII TSX)

Purpose Global Climate Opportunities ETF Fund (CLMT TSX)