The 2017 Investment Climate
January 24, 2017 |
Founder and CEO, Scottsdale Wealth Planning, Inc.
As a financial planner, I generally avoid predictions about what the future, and specifically the next year, may hold for investment portfolios. All too often, these outlooks are accompanied by recommended short-term, reactionary investment strategies that do not align with a long-term, value-based philosophy – the key to forming an effective portfolio. However, over the years I have become aware of various market environments and factors that could define the winners and losers within a given year. This is my assessment for 2017.
The mood. Investor sentiment has changed markedly since the presidential election. Those who feel they “won” tend to be optimistic and encouraged by the markets’ recent run. Those who feel they “lost” tend to be more pessimistic. Considering the strong divide of opinion, I expect investors will run through cycles of elation and disappointment as the first year of a Trump presidency plays out. Emotional investors tend to buy and sell at the wrong time, providing opportunity to more disciplined traders.
Rising interest rates. The major sectors of the market, including stocks, bonds and commodities, are projecting that interest rates will rise in 2017. Improving economic conditions is the factor to highlight, which rising interest rates are often tied to, including strong job growth and an expanding economy. In 2017, rising interest rates also mean a stronger U.S. dollar. While a stronger U.S. dollar is typically good news for American markets (and anyone traveling or buying overseas,) it can be challenging for foreign markets with weak currencies. This imbalance could provide uncertainty and investment opportunity in 2017.
Fiscal stimulus. In 2017, watching for increased government spending on large infrastructure projects, including airports, roads and bridges, with a boost to the U.S. economy is important. Increased demand for materials could lead to higher commodities prices, boding well for Emerging Markets, a sector that has underperformed in recent years.
Regardless of the news of day – or the year, for that matter – rely on a thoughtfully constructed, well-diversified portfolio to capture the positive returns for a long-term gain.
The world is always full of uncertainty, and will more than likely continue to be that way.
Paul Ohanian, is founder and CEO of Scottsdale Wealth Planning, Inc., an Old Town-based registered investment advisor, and Certified Financial Planner® with more than 25 years of experience providing financial services to the Valley. Visit him at www.scottsdalewealthplanning.com.
Information contained in this article is for informational purposes only and should not be considered investment advice. Advice may only be provided after entering into an advisory agreement with Scottsdale Wealth Planning. Information is at a period in time and subject to change. Scottsdale Wealth Planning’s current Disclosure Brochure is set forth on Form ADV Part 2 and is available for your review upon request.