At the end of every year I enjoy taking a look back. As you probably know, I’m a big believer in perspective and investing for the long term. And though our ability to look forward in time is still a work in progress, our ability to look back and gain some perspective is always valuable. So as we wrap up 2017, I want to take a look back at some of the major events that defined the year.
What Happened in 2017
President Donald Trump Inaugurated
The largest single-day protest in American history takes place
President Trump removes U.S. from Trans-Pacific Partnership (TPP)
Neil Gorsuch nominated to fill vacant Supreme Court Justice seat
North Korea test fires a ballistic missile across the sea of Japan
Patriots win the Superbowl
Space X demonstrates world’s first reflight of an orbital class rocket
Federal Reserve raises interest rates
Senior Strategist Steve Bannon fired
Computers worldwide disrupted by ransomware attacks
Terrorist bombing kills 22 and injures over 100 at a concert in Britain
James Comey fired from position as FBI Director
United States withdraws from the Paris Climate Agreement
Federal Reserve raises interest rates
Effort to repeal Obamacare fails
OJ Simpson granted parole
First gene editing of embryos takes place in U.S. using CRISPR technology
Reince Priebus removed as White House Chief of Staff
Total solar eclipse visible across U.S.
Hurricane Harvey strikes Houston killing 77
Hurricane Irma hits causing 134 deaths and ~$63 billion in damage
Earthquake strikes central Mexico
Gunman opens fire on a concert in Las Vegas killing 58 and surpassing the Orlando nightclub shooting as the deadliest in American history
Actor Kevin Spacey accused of sexual harassment
A new species of orangutan is discovered in Indonesia, the first great ape to be discovered in more than a century
Paradise papers reveals financial activities of celebrities, politicians, corporations and business leaders
A Leonardo DaVinci painting sells for a record $450 million, the highest amount ever paid for any work of art
Jerome Powell nominated to head the Federal Reserve
Matt Lauer, Mark Halpern and Charlie Rose fired over charges of sexual harassment
Michael Flynn charged with making false statements to the FBI
Senate and the House passed sweeping tax reform
Multiple members of Congress are forced to resign over sexual misconduct
And we still have a week left in the year!
To say it’s been a busy year would be an understatement. Yet for all that’s happened, we’ve had one of the lowest years of volatility in equity investments ever. Not once did the market experience a a temporary decline or even moderate pullback, despite calls for the “end of the world” by news media. While the world has gone crazy, the market has remained surprisingly calm.
Remember this time last year? The election was almost certainly going to be won by Clinton. The bizarre New York land developer, TV reality star, Donald J. Trump, who does not read books, has no background in government, no interest in the legislative process, some think he is an economic illiterate, narcissistic late night, uncontrolled Twitter-er didn’t have a chance.
History has a habit of making fools of those who predict the short term.
Certainly we have seen the economy rebound from the sluggish, lethargic +1-2% economic growth we’ve experienced. Suddenly calls for a GDP of 3% don’t seem as farfetched as they once did. Throw on tax reform and a pro-business government seeking to minimize regulation and we have a recipe for rapid economic growth.
Then there is the length of the current economic expansion – it has just been “too long”. I suggest that we have experienced minimal real economic expansion (especially after inflation) from 2008 – 2016. Now, we anticipate the markets will do what they always do: they will “correct”, but when and where is anybody’s guess. Normal markets experience a decline for some unknown reason, typically 10 – 15%, and that usually happens every year or so. This might come as a shock to investors, simply because we have not had such a “correction” for quite a time (Nov ‘15 to Jan ’16 -11% and previous to that the -19% in 2011). But in spite of a temporary pullback , I believe the United States continues to lead the world in innovation, growth, and resolve.
And why do the financial people call it a “correction” – correcting from what? Going up? A much better description is an unpredictable, temporary decline in prices, followed by a long-term permanent advance in prices. That is “normal” – and what markets in nearly every asset class.
What Hasn’t Changed
Our goal has always been to control what we can, and plan for what we cannot. But there are some things that never change. We believe in helping clients have a written, date-specific, spelled out retirement income or savings plan. We believe in the power of growing income and dividends and its ability to provide growing income for the years ahead. We believe “good behavior” is tuning out the noise, having a long-term perspective, and avoiding emotions like greed or fear ,and even the fear of missing out (FOMO – you know, Bitcoin). We believe in helping people live the kind of life they hope for and desire.
As usual, our country has experienced turmoil this year. There’s no other way to put it. But here we are, arguably the wealthiest, healthiest, and most productive that we’ve ever been. I know not what 2018 holds for us, but I believe in our progress, and I believe the future continues to look very bright.
If you would like to have a conversation about this, feel free to contact your advisor at Prosperion. We are grateful to do what we do for our clients. It is our calling, our purpose, our only reason for being in business. And we are Grateful for you.
Thank you – and may God Bless you and your Family in 2018
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
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LPL Research Outlook 2019: FUNDAMENTAL: How to Focus on What Really Matters in the Markets is filled with investment insights and market guidance for the year ahead. LPL Financial Research believes that even as investors face prospects for periodic bouts of volatility, emphasizing fundamentals will remain critical for making effective investment decisions. LPL Financial Research’s […]