FSWA Investment Outlook 2017

2017 Investment Outlook

 

Brian Kasal CEO of FourStar Wealth with our thoughts as we begin the new year, 2017.

 

To recap, 2016 is the year the experts got it all wrong. We had Brexit, Bernie Sanders, Trump and many things go contrary to the experts. There are strong implications for growth however from many of these activities. 2017 might be the year we break out of anemic 2% growth world. So, we will remain cautiously optimistic for 2017.

 

For 2016, SPX was up 9.5% and over 11% with dividends. Last week the Dow broke 20,000 which is a good sign of course. Job openings and hiring are strong, and jobless claims remain low, while Consumer sentiment is high.

 

On stocks, health care lead in 2015, but lagged in 2016. Commodities were ranked dead last in our work coming into 2016 and ran all the way up to be among the most favored asset classes in 2016.

Energy had been down for two previous years and rallied to be top ranked. For the first time in 5 years a majority of energy stocks are on positive trends! Brazil and many emerging markets are moving already in 2017 and other commodities industrial metals are moving positively also. Gold and Silver had a great first half of 2016, and ranked dead last in the second half, with small caps re-surging in the second half. Financials are moving up on better margins due to higher interest rates. With interest rates up, fixed rate bonds look less attractive, so investors would be smart to add bonds that prosper from rates going higher, namely floating rate bonds, as a hedge.