Volatile Markets Are Testing Buy-and-Hold: Barometer Capital's Case for Tactical Allocation
In August 2026, Washington put a 50% tariff on certain Canadian imports, and within days the advice to Atlantic investors sounded the way it always does: stay the course. For a 40-year-old adding to an RRSP every month, that advice is fine. For a retiree in Charlottetown selling fund units to cover the grocery bill, it means locking in losses every time the market slips.
That gap is why tactical asset allocation is getting a second look in Canadian portfolios. Volatility doesn't charge everyone the same price. The people who pay the most are the ones who need cash during the drop, or who borrowed to invest in the first place. If you are drawing retirement income, running a Smith Manoeuvre™, or holding next year's equipment budget in a corporate account, the question worth asking is how each dollar should behave when markets break down.
Buy-and-hold assumes you can wait
The math behind drawdowns is lopsided. Take an illustrative $100,000 portfolio that falls 30% to $70,000. Getting back to $100,000 takes a gain of about 43%, not 30%. If you are also withdrawing $2,000 a month through that stretch, you are selling more units at lower prices, and the climb back gets steeper.
Atlantic households often feel this harder than the national average. A lot of wealth here sits in a home, a few rental units, and a handful of big Canadian bank stocks, with a mortgage tying it together. When the investment account falls, it falls alongside the risks you already carry.
A tactical manager is defined by its sell rule
Barometer Capital Management, an independent investment counsel based in Toronto and offered through independent advisors across the country, is a useful example of how the tactical side thinks. The firm starts top down, working out which themes and sectors global money is flowing toward before choosing stocks. It then checks price and volume to confirm the idea before committing capital. When a stock or sector breaks its trend, it sells, whatever the story behind it, and it has been willing to hold large amounts of cash when markets turn down.
Leadership shifts are the opportunity it is hunting. Statistics Canada reported that business investment in machinery and equipment in the second quarter of 2026 reached its highest level since the second quarter of 2024, with computers and peripherals up 16.7%. Signals like that point to where money is moving, often into areas the bank- and energy-heavy TSX barely holds.
What you can take from this, whatever manager you use: the exit rule matters more than the entry. Any strategy that can't tell you in advance what makes it sell is buy-and-hold with extra fees.
Caution has a real price
Tactical managers carry real costs. In a sharp V-shaped recovery, a manager sitting in cash will trail a cheap S&P 500 index fund, sometimes badly. Fees run higher than an ETF's, so the case rests on actually protecting capital in a drawdown. Miss the defensive turn and the fee is hard to defend. The focus on market leaders can also mean holding nothing in a sector for months, which feels concentrated if you like owning a bit of everything.
Tax adds friction in non-registered accounts. More selling means more realized gains, taxed at a 50% inclusion rate on the first $250,000. The upside is that realized capital losses can be carried back three years against earlier gains. For a Smith Manoeuvre™ borrower, interest stays deductible under section 20(1)(c) of the Income Tax Act when the money is invested to earn income, but a volatile, concentrated strategy makes the swings in that leveraged account bigger.
Sort your money by its job
The useful move is to go through your accounts one dollar at a time and ask: if this fell by a third next spring, would I have to sell it?
Money you will leave alone for fifteen years can ride things out, and low-cost passive funds suit it well. Money funding retirement withdrawals, borrowed money, and corporate cash with a deadline all need a sell rule written down before the drop, because the middle of a falling market is the worst time to decide what that rule should be.
In August 2026, Washington put a 50% tariff on certain Canadian imports, and within days the advice to Atlantic investors sounded the way it always does: stay the course. For a 40-year-old adding to an RRSP every month, that advice is fine. For a retiree in Charlottetown selling fund units to cover the grocery bill, it means locking in losses every time the market slips.
That gap is why tactical asset allocation is getting a second look in Canadian portfolios. Volatility doesn't charge everyone the same price. The people who pay the most are the ones who need cash during the drop, or who borrowed to invest in the first place. If you are drawing retirement income, running a Smith Manoeuvre™, or holding next year's equipment budget in a corporate account, the question worth asking is how each dollar should behave when markets break down.
Buy-and-hold assumes you can wait
The math behind drawdowns is lopsided. Take an illustrative $100,000 portfolio that falls 30% to $70,000. Getting back to $100,000 takes a gain of about 43%, not 30%. If you are also withdrawing $2,000 a month through that stretch, you are selling more units at lower prices, and the climb back gets steeper.
Atlantic households often feel this harder than the national average. A lot of wealth here sits in a home, a few rental units, and a handful of big Canadian bank stocks, with a mortgage tying it together. When the investment account falls, it falls alongside the risks you already carry.
A tactical manager is defined by its sell rule
Barometer Capital Management, an independent investment counsel based in Toronto and offered through independent advisors across the country, is a useful example of how the tactical side thinks. The firm starts top down, working out which themes and sectors global money is flowing toward before choosing stocks. It then checks price and volume to confirm the idea before committing capital. When a stock or sector breaks its trend, it sells, whatever the story behind it, and it has been willing to hold large amounts of cash when markets turn down.
Leadership shifts are the opportunity it is hunting. Statistics Canada reported that business investment in machinery and equipment in the second quarter of 2026 reached its highest level since the second quarter of 2024, with computers and peripherals up 16.7%. Signals like that point to where money is moving, often into areas the bank- and energy-heavy TSX barely holds.
What you can take from this, whatever manager you use: the exit rule matters more than the entry. Any strategy that can't tell you in advance what makes it sell is buy-and-hold with extra fees.
Caution has a real price
Tactical managers carry real costs. In a sharp V-shaped recovery, a manager sitting in cash will trail a cheap S&P 500 index fund, sometimes badly. Fees run higher than an ETF's, so the case rests on actually protecting capital in a drawdown. Miss the defensive turn and the fee is hard to defend. The focus on market leaders can also mean holding nothing in a sector for months, which feels concentrated if you like owning a bit of everything.
Tax adds friction in non-registered accounts. More selling means more realized gains, taxed at a 50% inclusion rate on the first $250,000. The upside is that realized capital losses can be carried back three years against earlier gains. For a Smith Manoeuvre™ borrower, interest stays deductible under section 20(1)(c) of the Income Tax Act when the money is invested to earn income, but a volatile, concentrated strategy makes the swings in that leveraged account bigger.
Sort your money by its job
The useful move is to go through your accounts one dollar at a time and ask: if this fell by a third next spring, would I have to sell it?
Money you will leave alone for fifteen years can ride things out, and low-cost passive funds suit it well. Money funding retirement withdrawals, borrowed money, and corporate cash with a deadline all need a sell rule written down before the drop, because the middle of a falling market is the worst time to decide what that rule should be.
Read Next
What 27 Rising Stars Under 40 Reveal About Canada's Next Wealth Model
The Deficit Fell $11.6 Billion. Your Mortgage Rate Didn't Get the Memo.
Banks Call It a Transfer Fee, but It Works Like an Exit Penalty
Leveraged Insurance Ends When Regulators See the Downside, Whatever the Math Says