My next move
Going to sell my VXC, VCN and VEQT to go all into CAGX soon. The factor diversification, factor premiums, and selection and tilt of securities with more attractive valuations (without omitting the AI winners) is excellent.
Trying to time the market. Will deploy 10% of my portfolio in CAGX first, and then start DCA’ing the rest of my portfolio over 12 months starting right before the US midterm election in November - much volatility is expected.
Other risk factors at play in my view, which informed my CAGX decision and capital deployment strategy:
• Shiller CAPE at 40.94 when the historical mean is 17.42 and the max before the dot com bubble was 44.19. US market valuations are frothy and future expected returns are probably lower.
• Iran war and Ukraine war are still ongoing, and every passing day, an unfortunate surprise can happen. War is unpredictable.
• Elevated crude oil prices drive inflation. Fed hiked rates recently, with another hike likely by end of year. BoC may also hike rates soon. Rate hikes may add pressure on equities, as it increases the discount rate in all future cash flows.
• Yen carry trade is still active, with the yen continuing to weaken again despite the recent BoJ rate hike. Elevated oil levels also put pressure on the yen carry trade. The combination of weakening yen, rising rates, and high oil prices risk the carry trade unwinding and global equity PE multiple compression.
