Investors should position themselves for more ‘selling pressure': Portfolio manager

Volatility spread across asset classes on Thursday, as the CBOE volatility index spiked to its highest level since May, gold prices rose to two-month highs and all major U.S. equity indices closed lower, with the S&P 500 falling by 1.45 percent.

This turbulence comes on the heels of further comments from President Donald Trump regarding North Korea's nuclear program.

Investors ought to begin positioning themselves for this heightened volatility and anticipate a continuation of "selling pressure within the equity markets," in the coming months, said Chad Morganlander, portfolio manager at Washington Crossing Advisors. He anticipates investors will move into the bond market for continued "risk-off appetite" into August.

"I wouldn't be surprised to see the 10-year bond break a 2.15 level overall," he said Thursday on CNBC's "Trading Nation."

The yield on the 10-year U.S. Treasury note was lower, at 2.19 percent, by the Thursday market close.

In another classically "safe haven" trade, gold prices rose about 1 percent in Thursday trading. Morganlander said bullion could rise another 4 percent by the end of the year.

"We think that it should be in investor's portfolios. We would recommend that investors keep a 4 percent to 6 percent allocation, overall, of gold. In this type of environment, where valuations are elevated and you have some uncertainty on the geopolitical side, and you're not getting paid well for taking on the risk, we would advise investors to become more balanced in their portfolio … move up the quality spectrum … not only on the equity side but also on the fixed income side," he said.

In a post Thursday on LinkedIn, Bridgewater Associates founder Ray Dalio wrote that gold should be part of investors' portfolios as volatility rises. Specifically, he said, "[I]f you don't have 5-10% of your assets in gold as a hedge, we'd suggest that you relook at this."


Trades to Watch

Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

Read more