2017 Predictions

Monday 01/09/17

     It’s time once again for my annual predictions/guesses. This has become an annual tradition for me and I think it is helpful. I change my views throughout the year so do not assume that I am strictly managing money based on these predictions and remember that nothing in this post should be considered investment advice. This exercise is more of a time capsule that I can look back on and study my previous way of thinking; not only to see if I was right or wrong, but to see how my thinking changed throughout the year. If you have any questions, comments or taunts please leave them below or send me an email.

Unemployment, Wages, Fed and Inflation

     The unemployment rate will remain pretty much the same throughout the year. Wages and inflation will continue to rise. I also think the federal reserve will raise interest rates 2 more times this year.

Currencies

     The euro will fall relative to the pound, despite any Brexit related fears that may arise. The euro will reach parity with the U.S. dollar. The Canadian dollar will weaken and their overheated housing market will start to deteriorate. I’m not sure what will happen in China, it appears they are in the process of changing their policy of weakening the yuan. I think the dollar will remain strong, but not as strong as in previous years.

Stocks

     Valuations are stretched and earnings could be weak in larger companies that would be affected by a strong U.S. dollar, especially in the first quarter. I think we are near the end of the bull market, but it will probably make a new high and top sometime this year. However, earnings will improve somewhat. I think small and mid-caps will be the outperformers. I think value will outperform growth and companies with more debt will outperform those with less (as a general rule). Earnings from financials will disappoint, but this won’t have much affect on the stock price.

Bonds

     Interest rates will rise and bonds will be weak in 2017. The yield on the 10-year will reach a five year high.

Commodities

     Oil and natural gas will be volatile, but will trade in a range that moves sideways. Gold will move higher by a modest amount. Agricultural products will be the big winner in commodities this year.

Conclusion

     These are my guesses for 2017, if you want to know how I came to these conclusions please send me an email or leave a comment. If you disagree and would like to explain why I’m wrong, I would especially like to hear from you. Thanks for reading, Happy New Year!