I broke the same investment rule again….

I once again broke my investing rule of trading only once per quarter (if at all). What to do when two rules conflict with each other? I tried to err on the side of lower risk. I re-balanced early as one asset class breached a target threshold.

More here.

My second quarter 2019 portfolio review is posted

I have completed and posted my Q2 2019 portfolio review. We’re up 9.8% so far and things are looking good notwithstanding some possibly growing headwinds.

Read my full review here.

Why I am not changing my portfolio even though the yield curve has inverted

On Friday it was reported that the yield curve in the US inverted for the first time since the last (great) recession. This is supposed to be a reliable harbinger for a future recession in 12-18 months.

What does it mean when the yield curve inverts?

It means the US short-term interest rate (as measured by the 3 month Treasury Bill rate) is now higher than the long-term interest rate (as measured by the 10 year Treasury Bill rate). An inversion like this is generally regarded as a negative market/economic sentiment that can affect economic and market behaviour.

The yield curve inversion has sent some scurrying to make changes to their portfolios by raising cash, selling riskier stocks and becoming more defensive (buying utilities, telcos, REITS and consumer staples equities).

Why I am not scurrying to do anything on the news:

  1. I already have some cash (about 10% of my portfolio, including high-interest savings and short-duration bonds maturing later this year)
  2. I already have good exposure to defensive equities: ~18% utilities + ~11% consumer defensive + ~6.5% communications services + ~3.5% real estate = ~39.0% defensive
  3. I have less than 50% of our total portfolio in equities so a market downturn should be offset somewhat by non-correlated holdings in fixed income, cash and bullion (this was true in 2018, when my portfolio returned ~+1% in spite of equity drawdowns in Canada and the US)
  4. If I sell something to raise cash there could be tax consequences in our non-registered accounts, due to potential capital gains being taxed
  5. I don’t know which non-defensive equities to sell to raise cash – I like all my holdings for the long haul or I wouldn’t own them
  6. Recessions tend to be short and I believe my long-term portfolio is structured well for riding out short-term events
  7. An inverted yield curve has reportedly accurately predicted upcoming recessions eight times (by some sources) since 1968 but, if on January 1, 1968, I bought and held the S&P 500 (^SPX) I would have made a return of 2.81K% in spite of the eight recessions (including the Great Recession of 2008-09)
  8. According to Forbes, the chance of a recession in the next year is always about 27% (based on their data pointing to 16 recessions since 1960) and today the chance is 30%, hardly more than average
  9. If the chance of recession is 30% next year there is also a 70% chance there won’t be a recession next year which means, based on probabilities alone, I should be buying risk-on stocks
  10. If the US Fed surprises by lowering interest rates, that could change the situation immediately
  11. I don’t know how to time when to start re-buying the risk-on equities I am supposed to sell now – presumably when the yield curve corrects to non-inversion

I am not saying a recession won’t happen in 2019-20. It may well.

What I am saying, as a long-term investor who buys, holds and monitors a portfolio of retirement assets designed for all markets, who relies primarily on asset allocation rules when making security weighting decisions, and who makes limited and selective trades intended to improve overall portfolio quality, I don’t react to news like this.

Do you?




My annual portfolio review and updated household investment plan are now posted

I’ve posted my annual portfolio review as well as an updated version of my household investment plan.

My annual review shows a small gain in our portfolio for 2018, well ahead of major North American indexes. More here.

The updates to my household investment plan feature continued focus on sequence of returns risk and asset allocations based on “buckets” along with a reduction in our target portfolio performance going forward as we start to glide into retirement. More here.

OSC Executive Member Brad has updated the Steven Brown Retirement Forecaster tool

Brad has made some updates to Steven Brown’s Retirement Forecaster Excel spreadsheet tool (version  2.7.3).

The changes he’s made are improved accuracy with the calculations for CPP Survivor Benefits and CPP Death Benefit.

See Brad’s member page here for more..

More on sequence of returns risk

Sequence (of returns) risk is something I mentioned in my recent piece about my upcoming third quarter portfolio review. Sequence risk is a major factor in my planning as our household heads into retirement in the near future.

Looking at the current valuation of the S&P 500 vs. underlying gross national product is a bit sobering.

More on this here.

Previewing my next quarterly household portfolio review

September brings my next quarterly portfolio review and my next, self-imposed, securities trading window (I only trade four times a year). I have been giving a fair bit of thought this summer to what’s next for our portfolio.

Here’s a preview of my thinking….






Secular trends fantasy portfolio launch

I’ve launched a new fantasy portfolio on the money4retirement.ca website to track secular, or thematic trends for investors.

A secular trend is:

An investment trend associated with some characteristic or phenomenon that is not cyclical or seasonal but exists over a relatively long period.

The rationale for doing this and the initial portfolio structure is presented here.

The first secular trends fantasy portfolio tracking report (and its benchmark) is presented here.

I’ve also added a new menu option called “Secular trends and investing” on the site for quick access.

The decks from the April 2018 OSC meeting are posted

The decks from Mark Seed on DRIPping and from myself (Michael Patenaude) on the Q1 2018 OSC fantasy portfolios and sector allocations presented at the April 17, 2018 Ottawa Share Club meeting are posted here.

What US macro risks are investors facing these days?

It’s been over a year since I last wrote about macro risks emanating from the US and how they might affect Canadian investors.

Given how many changes are taking place in the macro environment recently, and how influential the US macro situation is for Canadians, I thought it would be interesting to do an update. The idea is to try to identify major driving factors that might affect US, Canadian and global equity markets in an effort to reduce the “surprise factor,” which may in turn lead to bad investment decisions (out of fear or panic).

So what does the macro risk profile look like south of the border? No one really knows for sure of course, but it is interesting to contemplate, especially if you have any US holdings in your portfolio.

Let’s take a look at some of the frequently-cited risks that may affect investors and try to determine if relative risk levels have increased or decreased since my last effort at this in January 2017.

I have listed them from what I propose are the highest to the lowest risks.

Notation used:

⇑ = risk is increasing

⇔ = risk is not changing

⇓ = risk is decreasing

Tax Risk = ⇑ (increased risk rating since Jan/17)

Definition: the risk that an investment will lose its value or return on capital because of taxation (most investments are subject to this risk)
My take: Recently, Trump decided to impose new taxes, in the form of tariffs, on steel and aluminum, and on various goods manufactured in China. China is already beginning to retaliate, raising the prospect of a trade war. It is unclear if Trump will lay on even more tariffs. It remains to be seen what the economic impact of new tariffs will be but the general consensus appears to be net negative due to rising costs of goods for consumers. Corporate and limited personal income tax cuts were delivered in December 2017 so that matter is settled for now.

Political Risk = ⇑ (same risk rating as Jan/17, but the overall risk is likely higher)

Definition: the risk that an investment will lose value because of political action in a country where one has investments, including one’s own country
My take: While his core support seems to be holding, the US president remains erratic and sensational in policy pronouncements, his cabinet turnover is record-setting, new cabinet and legal advisory appointments are arguably increasingly controversial and recently look like they are veering hard to the right of political spectrum and more confrontational in tone. Relations with Iran may become increasingly strained while relations with North Korea could possibly (but not likely) improve (the new national security advisor, John Bolton, advocates war with both countries). The president continues to accommodate, even congratulate Russia while many observers suggest this is inappropriate given demonstrable evidence of Russian interference in the last US election among several other concerns. The Mueller investigation continues to slowly gain momentum on three fronts: Trump’s possible (likely?) obstruction of justice; Trump/team conspiracy with Russia to tip the last election; and Trump/family financial dealings, including potential money laundering. New revelations about Cambridge Analytica’s role in the 2016 election and potential connections to Russian interference are gaining a bit more traction. The trial for Paul Manafort, Trump’s former campaign chairman, begins in July and further indictments by Mueller in other cases remain likely. The ongoing investigation means a constitutional crisis could easily be triggered if Trump does indeed fire the Special Council as he reportedly intended to do last summer, and may be more inclined than ever to do given his recent appointment of Joseph diGenova, who claims the domestic security establishment (a.k.a. “deep state”) in the US is trying to frame Trump. The possibility of impeachment is likely remote still, but increasing. There are mid-term elections in November which could lead to one or both Houses of Congress flipping to the Democrats, thus hobbling Trump’s agenda and making him accountable. Given all this uncertainty, I believe political risk is elevating in the US and by extension the world.

Market Risk = ⇑ (same risk rating as Jan/17, but the overall risk is likely higher)

Definition: the risk that an investment can lose its value in the market (applies to equities and fixed-income investments)
My take: Given the US market had been climbing steadily since November 8, 2016, the recent pullbacks have been long overdue. Most market gyrations tend to be short-term in nature and are of little consequence to long-term investors. Many commentators still claim the market is over-valued based on historical price/earnings ratios. Overall though the backdrop of corporate earnings, economic growth and planned orderly increases in interest rates contribute to medium term optimism in equity markets. There are no compelling hints of a recession yet on the horizon. Having said that, volatility has been increasing so far in 2018 (the ^VIX is up 125%), in large part due to increasing political, inflation and tax uncertainties. Market risk is being reflected CNN’s Fear and Greed Index (7% out of 100%) and in the recent drops in major indexes. Of the three major US indexes, only the NASDAQ is in the black so far this year. I would suggest market risk is rising due to heightened uncertainty in the political and tax environments discussed in this post and the recent increase in volatility.

Legislative Risk = ⇔ (reduced risk rating since Jan/17)

Definition: the risk that an investment will lose value or benefits because of new legislation (all investments are subject to this risk)
My take: This risk is related to political risk. The most recent spending law (as of writing today still unpassed before a midnight deadline) appears to be ignoring fiscal conservatism. Regulations related to offshore drilling, the environment and banking have been changed and, again, in the short to medium term are being well-received by investors. Longer term, these changes could be damaging to the US economy by contributing significantly to increased US fiscal indebtedness, reckless banking practices, over-stimulation of the economy, environmental degradations and potential knock-on inflationary impacts. NAFTA talks drag on, with some signs the US may be softening its position, especially in the auto sector. If a new deal is not struck soon, there will be little time for Congressional ratification, leaving the future uncertain. We don’t know what else could be forthcoming in the legislative and regulatory environment, but presumably not too much will change before at least the fall mid-term elections. If in fact a Democratic House of Representatives emerges, this would likely provide a damper on Trump’s legislative agenda.

Interest Rate Risk = ⇔ (reduced risk rating since Jan/17)

Definition: the risk that an investment will lose value due to a change in interest rates (applies to fixed-income investments and sometimes to equity investments depending on investor expectations for interest rate changes)
My take: Interest rates are still on track to rise three times this year (once already this week) even with the appointment of a new Fed Chairman. With two more rate increases promised in 2018, on top of this week’s rate increase, the market should be prepared. Wage inflation, in large part due to low unemployment coupled with economic growth, could also be a driver of higher than expected interest rates later this year, which could be bad for equity markets. We saw the market react to some of these expectations earlier in the year. Due to the combined effects of tax cuts and increased deficit spending expected this year, the US federal debt will climb, which is not positive for rates longer term. This is a tough one to forecast at the best of times but on balance it would seem interest rate risk in the short to medium term has decreased since January 2017.

Purchasing Power Risk = ⇔ (reduced risk rating since Jan/17)

Definition: the risk that an investment will lose its purchasing power due to inflation (applies particularly to cash and fixed-income investments)
My take: This risk is somewhat related to interest rate and tax risks in that the main concern would be higher-than-expected inflation, driven by wages, higher health care costs and possibly new tariffs, but counterbalanced to some degree by lower personal and corporate taxes. If Trump’s policies end up being inflationary then purchasing power may erode. This would likely take some time to happen. On balance the risk of higher inflation, from a very low level since the 2008/09 financial crisis, has probably increased, but for the short to medium term does not appear very likely to happen. The recent tax cuts, especially to individuals, will marginally add to purchasing power in the short to medium term and low unemployment could eventually cause wages to go up, improving purchasing strength of individuals.

Liquidity Risk = ⇔ (same risk rating as Jan/17)

Definition: the risk that an investment will not be easy to sell when needed (applies to some equities that don’t trade in large volume, fixed-income investments and real estate and other property that may be hard to sell quickly at an equitable price)
My take: I don’t see any reason to think liquidity risk has changed since January 2017– at least not in the short term. If some of the other risks in this post materialize, this could change, and possibly quickly. I leave this risk at the mercy of “black swans” without changing the risk rating from January 2017.

Reinvestment Risk = ⇓ (same risk rating as Jan/17)

Definition: the risk that an investment will be reinvested at a lower rate of interest when it matures (applies to fixed-income investments)
My take: If we expect interest rates to continue an orderly climb higher in 2018, new money that is being invested in fixed income should attract higher rates. If one deploys fixed income funds to rate reset preferred shares and/or bond funds or bond/GIC ladders of short to medium term duration (e.g. five years or less) then reinvestment risk should be falling.

Are there any actionable ideas here?

I believe that several risks I am tracking are falling, but the three risks that I believe are increasing (political, taxation and market) could have major impacts in the short to medium term. Longer term I remain somewhat optimistic.


With rates rising south and north of the border, and related sector rotation, there has been pressure on utilities, telecoms, consumer staples, materials and energy this year. Bond prices are slightly weaker so far this year as rates rise. I recently added to both utilities and bonds.

If the technology sector continues to outpace this year, I will at some point likely need to re-balance to reduce the percentage this sector represents in our portfolio. It is roughly 20% now and rising.

As stated over a year ago when last reviewing macro risks, I continue to balance short-term risk with longer term secular trends. Since January 2017 I have bought an ETF for robotics. I continue to hold biotechnology and water-themed ETFs and I continue to hold Shopify in the e-Commerce space (although I trimmed it somewhat last year). I am researching both alternative energy and cybersecurity as other possible investment themes for new cash in the future (and likely will be writing articles on them for Canadian MoneySaver).

In conclusion, it remains pretty much stay the course for me. I have an expectation that things will be more volatile in equity markets in 2018 compared to 2017. So I remain prepared for that eventuality. Otherwise, who knows?

Be greedy when others are fearful?

Just a quick post to point out that for the third time so far this year, CNN’s fear and greed index is down below 10 (on a scale of 0 to 100). This suggests, by its seven measures, investors are “extremely fearful” of the US equity markets right now.

Hmmm. What’s on sale in the markets? (Hint: telecoms, consumer staples, energy, utilities and materials).

Jan’s research on ETFs for robotics, artificial intelligence and other disruptive technologies

After the last Share Club meeting featuring the topic of driverless cars, Jan, a Share Club Exec, has kindly provided his research into ETFs following robotics and artificial intelligence and other disruptive technologies.

His material is posted here on his Ottawa Share Club member page.

Don’t forget, much more OSC member and guest content is available here.


Here comes the US debt ceiling again, and the possibility of a government shutdown

I have mentioned a white swan event here before. But it was avoided for the time being.

We may see one or more again.

December 2017 will be a busy month legislatively for the US federal government. Along with tax cut legislation, Congress and the president must deal with the debt ceiling and the possibility of a government shutdown due to lack of funds.

December 8 is an important date to resolve the funding issues. The end of the year is the president’s imposed deadline for tax cut legislation.

Failure on any of these major initiatives will be embarrassing at best and potentially be very damaging to the US economy and market confidence at worst.

US markets are near or at all time highs and volatility is very low.

One could argue market sentiment is a bit too complacent right now.

If stocks go down, what’s your plan?

My thoughts from early 2016, when markets were pretty soft are here. While early 2016’s pullback seems like a long time ago, my perspective hasn’t changed all that much since.

Has yours?


Exciting(?!) changes I’m contemplating for my trades in December 2017

You may know that I limit my security trading activities to once per quarter, or four times per year. This helps me with my discipline when managing my portfolio.

My next trade date is on or about December 15. I have been thinking about what, if any, trades to make at that time.

I’ve come up with two very exciting(?!) changes for my portfolio:

  • re-balancing bonds by purchasing more
  • topping up our holding in OpenText due to its present valuation and to invest some idle cash in one of our TFSAs

Isn’t that exciting?

Well, although I’m being facetious, it actually is kind of exciting for me. The reason: I finally feel like I am in true maintenance mode for our household retirement portfolio. I like the holdings we have (although I continue to look for improvements) and am mostly focusing on keeping our asset allocations in balance with targets.

For many investors I suspect this sounds terribly boring. What, no chasing outsized gains in the latest momentum stock? No short selling or short-term trading. LOL. Not for me.

But, boring can be good. We’re on track, at today’s pace, to exceed our target 7% return this year (at 7.4% as of Sept. 30 and currently forecasting an 8.8% total return by year end if the trend continues). That’s beating the TSX’s return to date of 4.7% (or 2.27% as of Sept. 30) and is being achieved with relatively low risk (less than 50% exposure to equities).

Yep, boring can be good.


e-Commerce ETF comes of age

Last January Canadian MoneySaver published my article on investing in the e-commerce secular trend. That article has since been posted here for free on money4retirement.ca as you may know.

In that article I mentioned in the footnotes a newer ETF called Amplify Online Retail ETF (IBUY) that trades on the NASDAQ. The fund was started in April 2016 and holds online retail stocks. At the time of publication of my article in CMS, I considered the fund too small for average investors to consider (it had a market cap of only $4.23 million and 150,000 shares were trading).

According to YCharts, the ETF today has a market value of $120.25M US and its 30-day average trading volume is just over 41,000 shares. So it is still not overly liquid, but is starting to get a bit more interesting given its growing market value.

The fund is interesting in a few ways:

  • while it is about 80% American focused, it also has about 8% and 10% invested in European and Asian holdings respectively
  • its composition is about 70% consumer discretionary (as expected), but also has exposure to technology (~21%), consumer defensive (~5%) and financial services (~4%)
  • the vast majority of the fund’s style is mid to small cap (~75%) and either small, mid or large cap growth (~72%)
  • it has 41 holdings in total with the top holding consisting of about ~7% of the fund’s value
  • IBUY pays no dividend and has a weighted average P/E of about 30, so is not cheap
  • as of October 31, 2017, its top ten holdings include:
Symbol Name % Weight Price % Chg
OSTK Overstock.com Inc 7.28% 44.55 +1.95%
STMP Stamps.com Inc 5.51% 171.25 -22.60%
CVNA Carvana Co A 4.41% 14.06 +0.43%
ETSY Etsy Inc 4.31% 16.59 +0.55%
PETS PetMed Express Inc 4.07% 36.56 -2.12%
PYPL PayPal Holdings Inc 4.01% 73.39 +1.58%
W Wayfair Inc Class A 3.92% 67.50 +7.42%
GRUB GrubHub Inc 3.71% 62.19 +2.24%
IAC IAC/InterActiveCorp 3.65% 129.15 -0.27%
NFLX Netflix Inc 3.45% 200.01 +0.35%

This is by no means an endorsement of the fund, but it is worth noting how quickly it is growing, and it may be on the cusp of becoming a viable pure-play holding in the e-commerce space for average, if high risk, investors.


Disclaimer: I/we do not hold shares in IBUY nor do we intend to purchase them in the foreseeable future.

Dotard vs. Rocket Man: Do the markets even care?

There has been lots of media coverage about the war of words between Trump and Kim (of North Korea). If a war does break out, some speculate as many as 25 million people could be casualties.

Do the markets even care? It would appear not so much, as new highs are being reached in the US. Asian markets are a bit more restrained.

If you are curious about the impact of wars on financial markets, 5i Research published a link from the CFA Institute that helps explain the historical response here.

In short, sad to say, a war between the US and North Korea might present a buying opportunity for stocks if they pull back short term.

The white swan swims upstream – for now

Not long ago I wrote a post about a possible “white swan” event. It was in reference to the risk that the US could have trouble raising its debt ceiling by the end of September.

The surprising deal between Trump, Democrats and presumably some moderate Republicans has pushed the risk out by three months.

For now, that is good news for markets.

There is even a movement afoot to eliminate the debt ceiling as we know it today, thus ending the recurring brinkmanship over raising it.

That too could be good for markets.

So, we’ll see if the white swan returns in December.

My portfolio trade ideas for September 2017

I’m looking ahead to my self-imposed quarterly trading date in September (this time it will be a bit earlier than mid-month as I am travelling).

We’re about 2% above our 47.5% target equity allocation right now.

The market seems a bit fragile and pricey to me. I believe risks that could affect markets have materially heightened during the course of 2017 (mainly due to sabre-rattling and possible political instability down in the US).

But then again, who knows?

I am planning on taking a bit of a risk-off posture when re-balancing this quarter.

Here are my trading thoughts:*

  • Reduce Shopify SHOP (overweight in equities, overweight in a single security & overweight in the tech sector)
  • Sell Cineplex CGX (overweight in equities, small holding/clean up trade, recent change in business model & very high volatility in the last quarter)
  • Sell Enghouse ENGH (overweight in equities, small holding/clean up trade & overweight in the tech sector)
  • Buy investment grade corporate bonds with 2-4 years duration (bond ladder replenishment & putting some idle cash to work)
  • Buy Valener VNR (shift to an income stock in the more defensive utility sector as part of transition into retirement, decent business fundamentals/value, low debt, sustainably growing 5.1% dividend along with a very low beta)
  • Buy North West Co. (NWC) (shift to an income stock in the more defensive consumer staples sector as part of transition into retirement, decent business fundamentals, not too much debt, sustainably growing 4% dividend along with a very low beta)
  • Buy gold (asset rebalancing)

Selling some shares in Shopify requires me to overcome some strong emotions. I have a history in e-commerce dating back to 1989 (as a consultant and as an entrepreneur) and probably appreciate what Shopify is doing better than many.

I still have a lot of long-term confidence in the company.

But we’re now well above the maximum allocation I’d like to have to any one company (it represents 9.4% of our equity holdings, and 4.6% of our total portfolio).

Additionally, over half of our portfolio’s gains this year have come from this stock. In 15 months we’ve made a 239% return. I feel like it is becoming too much of a gamble.

So I think it’s time to take some profits and reduce to a smaller, but still overweight position (~5% of our equity holdings). Like I say, I am still confident in the company long term.


*When I first posted about my trades I had thought of selling Fairfax Financial FFH as well. But I was reminded that it is still somewhat non-correlated to markets (5 year beta of only 0.23) due to the nature of some of its private equity holdings. So I am going to stay the course and keep it. I also had not identified my intent to buy North West Company.

What could go wrong between Donald Trump and Kim Jong-un?

While I am a financial blogger I can’t ignore the latest war of words (at least so far) between Donald Trump and Kim Jong-un.

The latest rhetoric: “fire and fury like the world has never seen” and “shameless defeat for America and its final doom” hurled respectively by these “leaders” is not going to help politics nor markets.

From a market perspective, there are some worrying signs:

  • CBOE S&P 500 Volatility Index (^VIX): +44% in 1 day; +54% in 5 days
  • Dow Jones Commodity Index Gold (INDEXDJX:DJCIGC): +0.84% in 1 day; +1.16% in 5 days
  • S&P 500 (^SPX): -1.45% in 1 day; -1.37% in 5 days
  • CNN’s fear and greed index went from 64 (greed) a week ago to 31 (fear)

The VIX is probably the most telling of these indexes. Volatility has been relatively low in 2017 to date, but that could change quickly given the unfolding of global events.

What does the long-term investor do under the circumstances?

I think the most prudent thing is to hold the course and maybe double-check one’s own investment policy statement for reassurance.

It may not be a bad idea to refresh your “wish list” of possible buys. If volatility increases, there may be opportunities to buy high quality companies on sale.

Do you have any companies you’ve wanted to own but have been unwilling to chase in these relatively over-valued markets?

If my asset allocations get out of whack due to a stock market pullback, I have some ideas where I’d like to deploy capital if bargains emerge.

Let’s hope things don’t spiral out of control. If the rhetoric continues, let’s further hope stock prices are the only victims of this escalating war of words between the “psychopath” and the “smart cookie.”

If only these two “leaders” could pause a moment and realize they have more than rhetorical style in common. Perhaps this whole conflict could be better settled by Trump and Kim playing a round of golf – something they both claim to be amazing at.

PS – Is this the end of the so-called “Trump bump” in markets?


A coming “white swan” event?

Is there a white swan event on the horizon?

A black swan event, a term coined by Nassim Nicholas Taleb, is essentially negative and unpredictable.

A white swan event is the opposite: a predictable event that will have negative consequences.

According the the Financial Times, last week a bout of nerves”  was injected into financial markets “as investors confronted the possibility of a disorderly stand-off over the US’s public debt limit.”

The Washington Post reports there are two kinds of Republicans: “those who think that the full faith and credit of the United States can be the subject of political experimentation, and sensible ones.” It is unclear which type will prevail in the remaining 12 working days left to resolve this political issue.

And in fairness, it is unclear how the Democrats will behave in their presumed negotiations.

The US’s public debt limit ($20 trillion) has already expired. Extraordinary measures by the Treasury Department are delaying the day of reckoning (where the US government becomes unable to meet all of its debt obligations). That day is September 29 of this year where some bills will go unpaid and a shutdown of government services will begin.

It’s not the first time this “abyss” has been reached but given the current political backdrop in the US, this time really could be different.

The Financial Times quotes Mark Zandi, chief economist at Moody’s Analytics: “This is an administration that has shown it can’t get anything done. Absolutely nothing.”

While anything can happen between now and the 29th of September, there is reason to expect more volatility in markets. If a worst-case, and hopefully highly unlikely scenario of default unfolded, it would be reasonable to assume a white swan event globally would ensue.

Certainly this is something for all investors to be watching closely for the next few weeks. Although, according to CNN Money’s “Fear and Greed Index” as of today, investors are blithely living in “greed” mode.