The upcoming press conference with president-elect Trump could offer insights into policy changes and the domestic and global effects. Looking back at historical data and market cycles can help investors make sense of what might be changing in the new year. With positive returns last year, having strategies for a diversified global portfolio could help continue growth, even in unknown conditions.
As Bond Market Sputters, What Should Investors Do? (CBS Money Watch, December 30)
The interest rate hike has caused some discussions about the end of the bond bull market and how to invest in the bond market moving forward. Investors need to consider why the bond market is important and how it affects an overall portfolio. Looking back at past markets, some experts think the bull market will continue but in a more restrained manner. Finding the right investment strategy matching a client’s risk tolerance and overall portfolio diversification could still result in positive long-term growth.
Investing in Preferred Stocks as Interest Rates Rise (Investopedia, January 4)
Preferred stock is one option to consider with interest rates on the rise. There are several unique characteristics that can make it valuable in today’s market conditions and help diversify a client’s portfolio. However, there are still risks with preferred stocks such as credit and call provisions. There are a variety of ways to purchase preferred stocks, but it can be research-intensive. Financial advisors and investment managers can help build a portfolio that is diversified and incorporates different strategies such as preferred stock.
77% of Investors Made Money in 2016 – and Women Beat Men Again (CNN Money, December 30)
Openfolio reports the average investor saw just over a 5% return in 2016 with women outperforming men for the third year in a row. Investors made the most money with hot tech stocks such as Apple and Facebook, as well as financial stocks, given the post-election news. Investors who had a successful year also had money in low-cost index funds and avoided some popular stocks that tanked. Moving forward, Seth Masters warns “The market may have gotten ahead of itself. It’s too soon to know what specific policies president-elect Trump will pursue and which ones he will be able to implement.”
What History Tells Us About Your Investments in 2017 (The Washington Post, December 30)
Looking back at historical data can help provide context for what the current market can expect in the coming year. With the unknown of the new administration it is important to have a long-term portfolio that is diversified enough to withstand hiccups in the short-term. Ignoring the facts of the current market and listening to “narrative fallacy” can cause investors to make emotional decisions resulting in negative returns. Understanding what rising interest rates means for the bond market can help investors ensure they have a cohesive portfolio that can withstand short-term change.
Investors All Ears as Trump Set to Break Silence (Investing.com, January 6)
The upcoming press conference with the new administration offers an opportunity for investors to get some insight on key issues that will affect market conditions for the coming year. The author of this article writes that it could be an “opportunity for Trump to highlight key priorities, with markets especially alert to details regarding tax reform, infrastructure spending plans and his China trade stance.” Investors have been playing a guessing game with upcoming policy changes and how it will affect the market.
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