I would like to thank all of my clients for the trust that they have placed in me this year to manage their investments. Before I review 2016, and make my market predictions for 2017, I wanted to wish you and your family a Happy Holiday. This will be my last post of the year. I promise that next year I will continue to probe for potential market risks, as well as seek out new investments that can help you meet your goals. It would be very satisfying to repeat the 2016 return next year!
2016 will go down as a year full of surprises. Merriam-Webster best encapsulates 2016 with their Word of the Year, ‘Surreal’. Here are a few of this years biggest surprises:
I’ll leave my market predictions for 2017 to the prognosticators who make a living out of predicting the future. Nobody could have predicted all of the “surreal” events that occurred in 2016. Larry Fink, who has been named one of the “World’s Best CEO’s” by Barron’s for nine consecutive years, said on CNBC yesterday that retirees should own more equities and less bonds. About one year ago, he was predicting a further 10% drop in equities after stocks had already fallen 10%. I’m positive that he would not have given that same advice last year! Mohamed El-Erian, who some consider the world’s best economist, is warning investors to raise more cash. His interview on Bloomberg TV the other day was very ominous. The only problem is that he has been giving the same warnings all year that investors should hold more cash. I expect him to double down on his warnings to hold cash. I would bet the house that at some point he will get it very right. Timing the correction is the difficult part. If these two market experts can’t make accurate predictions, then their guesses are as good as mine.
While I avoid making market predictions, I monitor for potential market risks. Here are five warning signs that the market is fully valued heading into 2017:
Optimism around Trump’s agenda is the major reason why the stock market has surged and keeps hitting record high after record high. U.S. business leaders are getting behind him 100% to bring manufacturing jobs back to the U.S.. Profits will rise if Trump can accomplish his aggressive agenda. However, the risks that I noted above are warning signs that markets will remain volatile.
I wish you and your family a healthy and prosperous 2017!