I came across a quote recently that struck a chord: “One of the major cheat codes in life is learning how to master the graceful exit.” Whether it’s leaving a party, a conversation or an opportunity, there’s power in saying, “This has been wonderful, but I need to go.” No drama, no excuses, just a clear, kind departure.

It’s a concept that feels especially relevant in today’s market environment.

Since spring, the market party has been in full swing. Liquidity is flowing again as the

United States Federal Reserve

subtly shifts back toward easing and optimism abounds. But beneath the surface, cracks are forming: U.S. regional banks are under stress; private credit markets are wobbling and

gold

, despite the recent weakness, is still up double digits on the year — a classic signal of uncertainty.

Globally, the economic picture is deteriorating, as France faces sovereign debt issues, the United Kingdom’s tax policy, among others, has triggered a projected

exodus of 16,500 millionaires

and Germany’s industrial output is sliding. Canada isn’t immune, with stagnation, rising

inflation

and political gridlock on resource development, all while jobs slip away under

U.S. tariff

pressure.

Unlike those fleeing millionaires, most of us can’t simply exit our situation. But we can rebalance. Traditional fixed income offers little refuge, so we at TriVest Wealth Counsel have replaced most bond exposure with principal-protected structured notes and monthly contingent notes with deep barriers providing downside protection and yield. For those without access to notes, the BMO Strategic Fixed Income Yield Fund may be compelling, using interest rate swaps, credit default swaps and currency forwards to hedge risks and enhance returns.

On equities, consider low-cost put protection on the S&P 500 or option embedded exchange-traded funds such as Simplify Hedged Equity. We also have cut our oil and gas exposure significantly, leaning instead into defensive sectors including telecoms, utilities and infrastructure. We are looking at companies such as Telus Corp., Fortis Inc., Canadian Utilities Ltd. and Brookfield Infrastructure Corp. for stability and cash flow. For growth, we have allocated to NewGen Asset Management’s Focused Alpha Fund, which excels in Canadian small- and mid-cap opportunities.

Last Tuesday’s sharp sell-off in gold and silver was overdue and we think an opportunity for those underweight or without exposure. We even did some buying. For perspective, gold posted its largest daily decline since April 2013, a healthy pullback after an overbought run.

Finally, don’t overlook cash as it gives investors the flexibility to act decisively when opportunities or risks emerge.

The bottom line? The market may still be partying, but now could be the time for a graceful exit from certain exposures. Not abandoning ship, just rebalancing, protecting gains and positioning for what’s next. Because when the music stops, those who exited with grace will be best prepared to re-enter with strength.

  • The financial system is too fragile to return to the days of old
  • With traditional safe havens no longer safe, here’s what investors can do

Martin Pelletier, CFA, is a senior portfolio manager at Wellington-Altus Private Counsel Inc., operating as TriVest Wealth Counsel, a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax, estate and wealth planning. The opinions expressed are not necessarily those of Wellington-Altus.

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