State Of The Market In 7 Charts – November 2016 Edition

PowerShares DB Com Indx Trckng Fund (ETF) (NYSEARCA:DBC)

Commodities certainly experienced a bit of selling this month as well. The initial expectation was that precious metals would do well under a new administration. However, the surge in risk assets led to a sell-off in gold and silver. A similar effect was achieved in the energy markets as well. Thus, broad-based commodity baskets like PowerShares DB Com Indx Trckng Fund (ETF) (NYSEARCA:DBC) have declined from their highs and may test the recent August lows.

Commodities have been a difficult area of the market for trend followers to get behind.  Although there does seem to be a burgeoning belief in the return of inflation under a Trump presidency.  Only time will tell how that plays out.

The Bottom Line

So much has taken place in such a short period in the financial markets.  However, I would caution against making significant portfolio changes in the midst of so much anxiety.  Often the first reaction is to try and capitalize on “new” momentum or quickly try to insulate your portfolio from certain risks.

It seems too early to speculate that the shockwaves will continue indefinitely.  Even if you have been caught off-sides by this event, it would behoove you to take a calm and measured approach to any asset allocation shifts.  The risks may quickly outweigh the benefits if you try to time every little reaction in the market without weighing both sides.

Note: This article is written by David Fabian and was originally published on the FMD Capital Management blog. FMD Capital Management is a fee-only investment advisor which provides daily updates on ETFs, portfolio strategies, and market insights. Contact them for a free portfolio review.