There were three trends that dominated 2017.
The first was no corrections. In a normal year we see one correction of 10% and three of 5%. The worst we saw last year was 3%. Nothing. Not even a blip on the radar. Thus the great fear everyone seems to have, when will that other shoe drop?
FYI. With the Dow Jones Industrial Average at 25,000, a 10% correction is 2500 points. If/when that happens, the media will be screaming panic. So, try to remember this is nothing but a normal correction.
And that is why I continue to maintain pretty conservative positions in the accounts I have discretion over.
The second trend was the dollar. When the dollar weakens, it is generally better to have money invested overseas. The dollar started weakening in late 2016 and I have slowly been increasing international exposure. Currently about 25%, and that is likely to increase.
The third trend is the huge rally in tech stocks. All tech stocks, here in the US, and also overseas.
Picture in your mind, or grab a piece of paper, and draw a tic tac toe chart. You should be looking at nine boxes. All the stocks in the US belong in one of those boxes, depending on the size of the company, and whether it is considered a growth or value type of company.
Tech stocks dominate the box in the upper right corner. My industry labels that box Large Cap Growth. All the big-name tech stocks that we have all fallen in love with are in that box, and that is the corner of the market that took off this year. Thus, the performance of your account is directly related to how much exposure you have, or the funds you have, are invested in that one box. ANY diversification away from that box hurt your performance this year. This same trend of tech out performance occurred overseas. Overseas, it was not really a question of what part of the world you owned, it was, did the fund you own have an abundance of tech stocks.
Alas, that is the picture I am seeing in my rear-view mirror. Now we look ahead to the unknown of 2018.
Thank you for your continued Trust and Confidence.
Gregory G. Riggs, CFP
Accredited Investment Fiduciary
Securities and Advisory Services offered through KMS Financial Services, Inc. Member FINRA/ SIPC
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for educational purposes only.