December 2017 Month In Review
December 2017 Month in Review
Saying goodbye to a year like 2017 brings mixed emotions. On one hand we are ecstatic with the calendar year results for our portfolios (because for some reason we measure returns with calendar years). Having the Dow Jones hit 96 record highs since the November 2016 elections1 makes us feel like if every 4th day the Dow DOESN’T hit another all-time high, something is wrong and the world is crashing. Investors are long-term investors are high-fiving each other while they slowly crank of the risk in their portfolio out of sheer confidence in their stock-picking capabilities, and new investors take a sigh of relief realizing that this “investing” thing isn’t hard at all! Then on the other hand, we turn around and look forward at our record high markets and only naturally do we feel like we just crept to the end of the eye of a hurricane. What lays in store for us in 2018? Will we lose everything we made this year? Will we repeat 2017 at the wonder of all economists? Will volatility come back or is it really just dead now?
Surely it was a good year. The S&P 500, Dow Jones Industrial Average, and NASDAQ all pulled out fantastic performance of 21.83%, 28.11%, and 29.64%. The only downside would be if you diversified your portfolio with smaller companies. The Russell 2000 (small company index) was up ONLY 14.65%, and the great diversifier, the bond market produced a measly 2.31%2. Even international markets had a great year.
With the end of the year bringing a conclusion to tax reform, the questions now begin of what is to come of 2018? While our Annual Outlook webinar hosted in January will cover our forward looking thoughts, we do believe 3 main things should be at the front of investors’ minds.
- The economy will continue to expand. Our leading economic indicators are screaming to us that we are growing in the US. And abroad, the global economies are continuing to heal.
- Volatility will return. We will not see the same quiet market of 2017; and because we believe the economy will continue to expand, the volatility will create opportunity, and finally,
- Because the economy will expand and volatility will return, we expect fundamentals to drive the market through the year. We expect valuations to hold steady and earnings to propel the market forward in the US and abroad.
Again, we will cover these topics and more in our outlook which will have a replay available on our website. Please don’t hesitate to call to discuss in much more detail our thoughts for the year.
Our main message today is, don’t get greedy. Just as when the market crashes we get emotionally fearful and tend to start selling, when the markets have this environment being coined the “Melt Up,” we get emotionally greedy and tend to start adding risk (buying) more than we really have the appetite for. This, by the way enhances the fear when the market then becomes volatile again.
If you have cash on the sidelines and feel paralyzed please reach out. We are happy to help you come to a rational and appropriate solution to maintain a portfolio that is fully invested and moving towards your financial goals.
A reminder, if you have missed any of our Month-In-Reviews you can find them archived on our website at https://www.aghwealth.com/p/month-in-review.
Thank you for your trust and confidence.
Brian Gensch
LPL Financial Advisor
Vice President, AGH Wealth Management
1 https://www.thebalance.com/dow-jones-closing-history-top-highs-and-lows-since-1929-3306174
2 Morningstar Direct™ - bond index measured by the Barclays US Aggregate Bond Index
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indexes are unmanaged and cannot be invested into directly. All indicies are unmanaged and may not be invested into directly. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Stock investing involves risk including loss of principal.