US Election: Taking a defensive stance in the portfolio makes sense, risk to the downside

The market is pricing in a Clinton victory, but there is still plenty of time for things to change.  If they do the markets will react to the proposed uncertainty of a Trump presidency in a violent manner.  Accordingly, I believe it makes sense to take a defensive stance in an investment portfolio. After all, if a Clinton victory is expected and priced in the upside in equities is likely limited and the risk will be to the downside.  T

               US Dollar – 0%

               Commodities – 20% (with gold receiving the largest allocation)

               Equities – 55%

               Bonds – 25%

• Do you foresee any trading opportunities ahead of the Election? Which ones?

I believe we will see a stark increase in volatility as we head into the election and in its aftermath.  As is the case with most large events, the best course of action is to keep speculation mitigated ahead of the event to keep capital available to take advantage of potential anomaly pricing once the market has reacted. For instance, those who went long the S&P on the heels of the Brexit collapse likely fared well. Similarly, buying the British Pound into its collapse was initially a good trade. In short, traders should keep plenty of fire power available; any large fallout in the equity market or the US dollar could provide favorable opportunities for the bulls.