As you know, the Federal Reserve raised interest rates recently, and we've gotten several questions from clients wondering
By: David Smyth, February 2, 2017
Believe it or not, we are one month into 2017, and we have a Republican president. Eight years ago, we were one month into a new year and we had a Democratic president. But this year feels a lot different than eight years ago.
Back then, Republicans had given up hope and resigned themselves to all kinds of stuff Obama was going to do - and he did. This year feels different with all of the protesters who are determined to demonstrate and march until Trump apparently comes to his senses. This strikes me as very odd behavior from one political party.
Now trust me, I'm making no judgement on whether this is good or bad, but all this activity has made some of my daily enjoyments - Facebook, my Twitter feed, even picking up a newspaper or watching TV - nearly unbearable.
And now, let's talk about the financial markets! While the markets aren't in any particular chaos and have been treading water since the start of the year, there's now a new event risk, namely which Fortune 500 company Trump will Tweet about (just ask Lockheed Martin). In addition, we've got the headlines about so-and-so boycotting such-and-such (think hipster Uber users), and such-and-such is in turn boycotting so-and-so (think Starbucks activist-addicts). Folks, this is crazy. It's all collectively creating unnecessary risk in the financial markets that we don't need to have.
How long will this go on? In my personal opinion, I think this is the new normal, for a little while anyway, just like capri pants. But the point is, eventually we'll all become accustomed to this new normal and desensitized to what's going on, and the markets will desensitize and go back to the bigger issues of corporate greed, global warming and who gets the final rose from The Bachelor.
So, in this news and emotionally driven political period that we're in, let's not lose sight of the fact that the greatest strength of America is that the people are allowed to protest, march, make their voices heard - and not get shot in the street while doing so. Eventually, the mob will not be as interested in Trump or his wall or his immigration policy or his Tweets.
Now, if you're able to look past all the other stuff, the question that's probably on your mind is, is this a good time to invest? We can all play market prognosticator, and I, for one, think the economy is getting better, not worse. I think credit for personal lines of credit, mortgages and cars will continue to expand as deregulation of banks' lending portfolios occurs, and that this trend will continue. I believe you can still get a decent dividend yield from high quality stocks, and when you have a president who has built most of his empire on real estate, commercial real estate may be something you should consider for your portfolio. I also believe that unless we have significant financial turmoil, that bonds will continue to disappoint investors as the Federal Reserve continues to raise interest rates over the next several years.
As you figure out what funds you have left to invest after taxes, and/or you want to jump ahead and pre-fund some retirement accounts to maximize the growth of those accounts, we'll be ready to have a discussion with you and help you allocate your hard-earned funds as prudently as possible. Call us anytime.