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Market Thoughts - 2017 Year End


Well, the year has closed and year-end data is now out.  Let’s take a look at some of the highlights.  Feel free to share it with anyone you think will find it of interest.  Or, you could just memorize it all and impress your friends😉

  • Large Cap Growth won the best performing asset class for the year at 30.2%.  Small Value was the worst with a gain of 7.8%.  Since the market low in 2009, Mid Value leads the way with a cumulative return of 457.1% and Large Blend (combination of Large Growth and Large Value) lags with a gain of only 376%. (italics = sarcasm font)
  • Not surprisingly, Technology was the best performing sector for the year at 38.8% (the bulk of tech companies are Large Growth).  The only negative sectors were Energy and Telecom with losses of 1% and 1.3% respectively. Consumer Discretionary has been the best performing sector since the low in 2009 with gains of over 617%.
  • Emerging Markets led the way once you include international asset classes.  It returned nearly 38% last year.  China enjoyed growth of 54%.  Strange since neither of these are under control of US tax policies or politics.
  • Commodities were slightly ahead of the return on Cash.  They were 1.7% and 0.8% respectively.
  • Since 1980, the S&P500 has seen average inter-year drops of 13.8%.  During this 38-year period the market has been positive in 29 of those years. 
  • Corporate Cash continues to be near all-time highs of 30% of percent of assets.  Let’s see how that number looks a year from now after the corporate tax rate cut.
  • Both Unemployment and Wage Growth rates are well below their 50-year averages.  As of November 2016, unemployment is 4.1% and wage growth is 2.3%. 
  • The CPI (Consumer Price Index) is well below its 50-year average too.  Except for the Energy CPI which is nearly double the average. Inflation ended the year at 1.7%.
  • There are expected to be four rate increases by the Fed this year.
  • I think the “death of the bond market” predictions for last year were a bit off.  Emerging Market debt was the leading fixed income class with growth of 15.2% while the worst performing was Treasuries at 2.3%.
  • 64% of people think they need at least $500,000 for retirement.  The average amount saved for retirement for people between 65 and 74 is $126,000.
  • Since 1950, the Dow has been up more than 25% 10 times.  It was then higher the next year in 8 of those years.  6 of those years it was higher double digits again.  Lesson – don’t become a bear just because last year was such a bull.
  • Did you realize the S&P500 has been positive 14 out of the last 15 years?  The only negative year was 2008 at negative 37%.  Yep, even 2007 and 2009 were positive at 5.5% and 26.5% respectively.