“Late cycle” is a time when investors transition from pro-cyclical stocks (energy, consumer discretionary) into telcop, staples, utilities and healthcare–defensive stocks. That said, Canadian telcos haven’t done well, though utilities and real estate have done better. Investors need to review their asset allocation (stocks/bonds mix) to protect themselves in this late cycle when multiples contract from 16x to 14x earnings in the S&P. Tighter money will mean less company hiring and consumer spending. Resolving NAFTA (finally) will be a big relief–and it will happen. It will be positive for Canada. Foreign investors will look at Canada more favourably. The auto sector may enjoy a pop.

Investors need to review their asset allocation to protect themselves in this late cycle.