Despite a number of major news stories that could have impacted the markets, investors were treated to relatively smooth sailing in the first half of 2017. From the inauguration of President Donald Trump, to Brexit talks, multiple interest rate hikes, allegations of Russian interference in the U.S. elections and more, the markets seemed to weather the big stories, and even broke some records in the first two quarters. So, what’s ahead for the rest of 2017?
In recent weeks, we have seen a variety of prognostications for the rest of the year. While many of the reports we have read are positive, some experts predict that the second half of 2017 may not be as robust as the first six months, due to lackluster economic data, higher-priced stocks, and fears that the Federal Reserves will increase interest rates again and cut back its bond portfolio, potentially creating less stimuli for the markets and the economy.
On Monday, Stanley Fischer, vice chairman of the Fed, said low interest rates send “a powerful signal that the growth potential of the economy may be limited.” He cited estimates by the Congressional Budget Office that the U.S. economic growth potential is closer to 1.5 percent, despite a goal set by the administration to increase growth to at least 3 percent. Fischer attributed slower growth to poor productivity, demographics and weak business investment. How those factors could impact the markets remains to be seen.
While no one can truly predict what will happen throughout the remainder of this year, investors can take a few steps now to help ensure their portfolios are ready to take advantage of market returns, while minimizing risk. First, if you already work with a financial advisor, it may be time to schedule a chat to revisit your investment goals if things have changed in your life. Second, don’t forget to rebalance your portfolio. Recent market gains may have skewed your target allocations, so it’s best to manage your portfolio regularly to keep the allocations where you want them to be. Finally, revisit your investment mix. Is it globally diversified? If not, determine how you can increase diversification and reduce risk.
In my opinion, clients who define their goals, develop an investment policy, and stick with their plans are more likely to achieve positive outcomes over time. Successful investors tend to ignore the headlines, put blinders on when emotions tempt them to buy or sell, and stay focused on the long term. Advisors can offer guidance, accountability, facts, encouragement, and the wisdom of experience. As you look ahead to the next two quarters, consider how a nationally recognized independent financial advisor can help you achieve your goals – then contact us to schedule a complimentary, no-obligation review of your investment portfolio. We’d be pleased to help.
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