Since the election, we have seen a real run up in the stock market. It appears that a whole lot of investors are betting that our new President is going to accomplish everything that he has promised and more. Especially when it comes to our economy.
How else can you explain the dramatic move to the upside in certain sectors of the market?
This is coupled with the expectation that the Federal Reserve will raise interest rates this year. This has its own impact on the bond and stock markets.
What does this all mean? A whole lot of uncertainty. Remember, as fast as a market moves up on hope it can move down on despair.
So here are some questions to ask yourself.
- What if the policies of the new President don’t work? What if they work but don’t live up to expectations?
- What if the expected changes in the regulatory environment don’t make things better but make things worse?
- What if the Federal Reserve decides to delay their proposed interest rate hikes?
- What if the Federal Reserve decides to accelerate their proposed interest rate hikes?
Are you willing to bet your financial future on what ifs, maybes, or what some politicians and bureaucrats in Washington decide they will or will not do?
I am not willing to bet the farm on what may or may not happen. However, I do believe that it is time to review, re-access and make changes based on a number of likely scenarios.
- I do believe that over the long term interest rates will continue to rise.
- I do believe that there will be a lot more volatility because change and uncertainty does bring volatility.
- I do believe that it is important to be invested but not to bet the farm in one particular area of the market or the economy.
With all this in mind, we are making a number of changes to our core investment strategies. These changes will be implemented over the coming months.
It looks like we will be living in very interesting times for the next several months if not years. I know that I will be having some great discussions about this and other events going on around the world.
Have a wonderful, healthy and happy 2017.
*Please keep in mind that this blog is the opinion of the author. It is not a recommendation to buy or sell any particular security, insurance contract or other investment product. Any and all investment decisions should be made only after consulting with a qualified advisor. Everyone’s risk tolerance and financial needs are different. We strongly recommend preparing a financial plan before making any investment decisions.