With the new year in full swing it's the season when market analysts of all shapes and sizes reveal their educated guesses about what the markets and economy are likely to do in the year ahead. While many of these prognostications aren't worth the time it takes to read them, some come from very good analysts and are worthy of our attention.
The Holiday season is upon us and I don't know about you, but it seems to have shown up rapidly this year. Where does all the time go? As in prior years, this will be my last post for the next two weeks. I'll still be hard at work through year-end, but I'm trying to carve out a little extra time with family.
If we don't talk beforehand, I wish you Happy Holidays and success in the New Year!
It's the little things that matter and the devil's in the details, two idioms that apply to the current tax debate, as well as anything having to do with your finances. With all the headlines coming out following the Senate's passing of their tax plan last Saturday, it's far too easy to get stuck on the soundbites of who will save this, and who will pay that. Important details can get overlooked. In this case it's an obscure add-in to help pay for the plan.
Happy New Year! Well, I don't know about you but I'm excited to start 2018. Last year was a great year but was also challenging in many ways, dominated of course by the North Bay fires and other natural disasters. Reviewing the Time Magazine 2017 retrospective issue over the Holidays showed just how intense much of 2017 was.
But last year was also a solid yet quiet one for stocks. I recall having conversations with clients a year or so ago about the potential disconnects between the social, economic, and market outlooks at the time. That certainly proved to be the case in 2017. If nothing else, the stock market's run last year showed just how dispassionate Mr. Market is, even while being subject to fits of melodrama.
As had been the case all year, more aggressive portfolios saw continued strong returns during the fourth quarter. The S&P 500 was up almost 7% during the last three months of the year and the Dow 30 was up nearly 11%. Emerging market stocks, which turned out the best performance of 2017, was up 7.5% during the quarter.
The bond market continued its comparatively modest performance during the quarter and year-to-date, with the U.S. Aggregate index generating 0.4% and 3.5%, respectively. Corporate bonds fared better than Treasurys, and high yield (aka "junk") bonds performed better, but bonds as a category woefully underperformed the stock market. This is what bonds due when stocks are up. They chug along maintaining their value and paying their interest payments, a virtue when stocks are down but challenging in years like 2017.
Here's a roundup of how the major indexes performed during the quarter and year-to-date:
S&P 500: 6.6% and 21.8%
Dow 30: 11% and 28%
Small Caps: 3.3% and 14.7%
Foreign Stocks: 4.3% and 25.6%
Emerging Mkts: 7.5% and 37.8%
U.S. Bonds: 0.4% and 3.5%
Here's how some other rates and indicators stood at year-end:
Prime Rate: 4.5% (began the year at 3.75%)
10yr Treasury: 2.4% (began the year at 2.45%)
30yr Mortgage: 4.16% (began the year at 4.39%)
Oil (WTI): $60 per barrel, up from $54 a year ago
Gold: $1,291, up from $1,146 a year ago
The Dollar: down on the year versus other major currencies, which helped drive U.S. and global stock market performance.
Major tax reform might just be a couple of weeks away, but it sure is coming down to the wire. The lateness leaves precious little time for planning. A common question has been what, if anything, should we be doing now given how Congress's planned tweaks to the tax code might impact investors. The short answer is nothing... well, almost nothing, until the legislation is signed and we have more details.
Mainstream interest in bitcoin has been growing rapidly in recent months. As often happens, investor curiosity increases along with investment performance. Bitcoin, just this year, is up nearly 800% after rising from about $1,000 per "coin" in January to almost $10,000 as of this writing. But this fabulous performance tends to raise more questions for investors than it answers.
What even is a bitcoin? What are the risks? How would we go about buying bitcoin? What role could (or should) bitcoin, or other cryptocurrencies, play in our investment portfolio?
