We’ve reached the mid-point of 2017, and if you’re like a lot of investors, your mind may be focusing more on summer vacation than your portfolio. After all, the first six months of the year have been fairly smooth for the markets, despite news that in other years may have sent the markets reeling. Among the news headlines: the inauguration of Donald Trump, allegations of Russian meddling in the presidential election, two Fed interest rate hikes, record low unemployment, Brexit talks, debt problems in China…the list goes on and on.
Despite the headlines, the Dow continues to set records. And, as CNN Money reported last week, if Wall Street is worried, it’s definitely not showing it. Before the end of the second quarter, a survey by CNBC found that Wall Street strategists were predicting continued market gains through the end of the year, with more than half predicting that financials would be the top-performing sector. At the same time, however, market worrywarts have cautioned that investor complacency could be a reason for investors to be cautious, and many expect the second half of the year to bring more volatility.
What should all of this mean to you? Wait for it…
The countless predictions made by so-called financial experts are, at best, noise. Nobody has a crystal ball that can accurately predict the future. Pundits may point to lots of research and historical data, but the truth remains: Past performance is no guarantee of future results. As Nobel laureate Eugene Fama, one of the fathers of Efficient Market Theory, observed, “The probability that you can lose money never goes away…it’s the nature of the beast.”
If you are already doing everything you can to capture expected market returns while managing the risks involved, then you can get back to enjoying your summer. But if it’s been awhile since you’ve revisited your portfolio, you might want to take a second look. Some questions to ask yourself:
- Have my goals for the future changed? If they have, it may be time to reexamine and update your investment strategy.
- When was the last time I rebalanced my portfolio? Perhaps our recent market surges have shifted your portfolio’s target allocations, leaving you holding a little too much of a good thing. Because prudent portfolio management calls for maintaining your balance in good markets and bad, it may be time to examine your asset allocation to help keep your portfolio on track.
- Is my portfolio globally diversified? As the saying goes, don’t put all of your eggs in one basket. As you diversify, you also spread risk, helping to minimize losses if one of your asset classes underperforms.
For a full report on the market’s performance in Q2, I invite you to download our complimentary Quarterly Market Review, and to contact us if you need help getting your portfolio back on track. We believe setting clear goals, and holding a globally diversified portfolio over time, serves the best interests of our clients. We welcome your questions, and look forward to working with you.