What's in Stock for 2017?
Happy new year!
So what waits us in 2017? Will the Dow Jones reach 20,000? Will stocks continue this surge? Where are the interest rates going? Yup the same ones that are for mortgages and savings rates. These are just some of the questions that people are asking in 2017.
Before we get into this - let's look at what happened in 2016.
Retail Sales were quite poor this year – partly fueled by a decrease in disposable income and an increase in online shopping. Conventional retailers like The Bay, Costco, Macy’s, JC Penny, Kohls had very bad years with their stocks heading in the direction. Canadian Giant Sobeys (and IGA’s distributor) had a dismal year with the stock shedding 38% on the year.
Oil Prices Started the year at around 26$ a barrel and they h8ave rallied to >50$ now mainly due to OPEC deals. However, with the more players entering the market and pumping out record barrels – I expect the price might go up but not to the degree of historical prices
Historical Year in Politics. 1st with Brexit in June that made the markets tumble and then quickly regain the losses and then some. Although the pound was hit badly and deals with the UK were put in flux – it did not seem to change the overall landscape in North America.
The election in the USA turns some heads as well with Trump winning. However, the market has soared since he won – turning many heads and create even more anxiety as to what awaits post inauguration on January 20th. Markets will be “Jittery” Everybody is waiting for encore before embarking upon investing in their 2017 Tax savings plans and the upcoming RRSP season.
Outlook for 2017:
Will the Dow hit 20,000? Bull or Bear? The overall market has not seen a correction in awhile. I think many people were ecstatic about Trump’s economic plans that he preached. The Sprint and Carrier job announcements probably compounded those. But I expect, a drop after he is inaugurated and the excitement dies down. It’s a known fact as well that retail sales are very bad in January & February – which could drag the market down further. Last year, February was the low-point of the year for stocks and its possible we see the same again.
It will be curious to see where the consumer debt ratio for families are going. The latest report showed a 1.6:1 debt-asset ratio. Meaning for every one dollar in assets people owed 1.60$ in debt (excluding mortgages). With the carbon tax in Ontario coming into effect – gas prices will go up as well. Albeit the increase is 5 cents a litre – a lot of families live paycheque to paycheque and this will put a larger strain on disposable income.
The US is also planning another rate hike in 2017. The increase in interest rates will result in higher mortgages for people and a rise in bond yields. Since bonds are safer then stocks there might be a movement of money from stocks – bonds because of less risk further pressuring stock prices.
My Wishlist for the New Year
If there is a market correction – I will seriously look at some index funds or index ETF’s. These will track the overall market and create instant diversity. The fees are also very low for ETF’s which is better for me
Look to add some recession proof stocks – these are companies that will do well even when the market is in a slump – such companies are one’s consumers are dependable on like utilities and certain retailers like large grocers (Walmart) and retailers like drug stores and dollar stores.
Finally remember the market has shown to reward investors in the long haul. Historically the DOW pays out 6-8% on average. Constant re-structuring and selling/buying may mean you miss out on opportunities while racking endless transaction costs - trust me I've been there!
Disclaimer; All of the above information is my own personal opinion. Please do your research before making any financial decision. Please consult with a licensed representative before making any financial decision. Past performance is not a guarantee of future returns.
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