At the end of last week Fidelity's Global Asset Allocation Team updated us on their recent positioning, and I have shared that with you below."As we have mentioned before, we are in the later stages of the business cycle, and volatility is common. Most of our Portfolio Managers remain confident in the U.S. economy, and have taking this time as an opportunity to buy into equities that have taken a substantial beating. Fidelity does not believe a U.S. recession is on the horizon." Key Points from the Global Asset Allocation Team Despite the recent volatility in the market, David Tulk and the Global Asset Allocation (GAA) team believe the probability of a recession over the short-term remains low. They feel what has been unfolding in the market is the onset of a late market cycle. Market participants are now coming to the realization that we are entering a new stage of the market cycle as global growth has peaked and expansionary monetary policy is winding down. As the markets adapt to a new environment, trends that have worked in the past might not be as reliable going forward. As we enter this new market environment, investors need to diversify to better protect their portfolios. Diversification has always been a core process for the GAA team as they understand that different asset classes will respond differently depending on the market environment that they are in. As mentioned, the GAA team believes we are now entering a late market cycle, which typically comes with more volatility. Positioning From a positioning standpoint, the team favours global exposure: NEUTRAL U.S. EXPOSURE: The U.S. market was the leader in 2018, but factors such as a more hawkish Federal Reserve and a lesser impact from 2017 tax cuts may weigh on returns going forward. UNDERWEIGHT CANADA and CDN Dollar: Canada has its own set of issues such as stretched housing market valuations, high consumer debt levels, and structural issues in the energy sector which all contributes to a less optimistic outlook for the Canadian market. The team is also re-establishing an underweight position in the Canadian dollar after paring it back slightly over recent months. This is based partly on renewed conviction of the challenges this economy faces but also as a way to mitigate the overall risk of the funds, as exposure to U.S. dollars (in addition to Japanese Yen) will provide more protection amid market volatility. OVERWEIGHT JAPAN: One region the Global Asset Allocation team is looking at as an alternative is Japan where valuations are low and long-term returns look attractive. The Japanese Yen is also one of the more defensive currencies, which may help mitigate losses in a market downturn. MOVING DEFENSIVELY: Further, the GAA team is moving the funds they manage towards a more defensive positioning as we move into a late cycle environment by gradually reducing holdings in credit sectors and equities, as well as slightly reducing the duration underweight. Staying Invested The GAA team understands that experiencing market volatility may feel unpleasant which is why they believe being properly diversified is crucial, as it can help to minimize portfolio volatility and deliver consistent returns. Markets can and will over-react at times, major shifts in overall positioning are made when the team’s fundamental macroeconomic views change, but not in response to short-term market volatility. Frequently buying into and selling out of the market is one of the most common issues investors run into, which usually results in buying at a high point and selling at a low point.