Fallout From U.S. Election Results

Dear Members of the Vodia Community,

Well, I don’t exactly know where to start.  The election results from Tuesday night are a turning point for this country and for the world in a way that I never expected to witness in my lifetime.  Unfortunately, it points to a distressing chapter in our history.  I have a number of theories on what happened and what will happen but we will cover that in depth later.

The markets have responded positively after a night of utter chaos. The Dow swung a total of 1,000 points from high to low in twelve hours, currencies have gone every which way with the Peso losing 10% and commodities are flying around as well.  The salient points for our portfolios, as of right now, are:

– Our equities have all done well despite this chaos.  We have a large concentration in healthcare (for fundamental reasons) and healthcare is well ahead today based on the prospects of no Congressional action against drug company price increases – a strong part of Clinton’s platform.

– Our financial holdings in equities also rallied based on the perception of expected lower regulations for the banks.

– The heavy emphasis on fixed income investments has buffered all portfolios.  The expectation of higher inflation combined with dovish Fed policy has created a steeper yield curve, boosting the income stream in our structured notes.

– The private pooled investments are entirely decoupled from this volatility.  Only long-term economic trends will have the potential to impact those investments and we are assessing what this impact may be.

For lack of a better phrase, this is a s***-storm that we are weathering well based on our relatively conservative positioning focused on income generation.  It will take us several weeks to assess the actual impact of the election on our investment portfolios during which time you should expect to see adjustments in your holdings to reduce risk.

Overall, this “change” is likely to harm our economy over a long time span while it, in the short-term, creates some optimism around business-friendly legislation by a Republican Congress.  Though we seem to be well positioned in all aspects as of now, the potential for abrupt change is cause for us to review the portfolios.

As many of you know, together we have weathered other distressing times and our staff has worked consistently during such times to protect your portfolios.  We have never taken for granted your trust in our work and appreciate your partnership as we move forward.

We will be hosting a Live Market Commentary webinar on Tuesday, November 15th, at noon to fully assess the impact of the election on markets, the economy and our society.

Until then,

sig

David Matias