As 2017 comes to a close, investors have much to be thankful for. At the time of this writing, US stocks are up more than 20%, international and emerging markets stocks up even more in the 25% to 30% range, and bond funds are also in positive territory with low to mid-single digits returns year-to-date.
Earlier this month, Congressional Republicans unveiled the details of their much-anticipated tax reform plan. Ostensibly, their goal is to simplify the tax code by eliminating a host of loopholes, broaden the tax base, and lower average tax rates for both individuals and corporations. The premise is reasonable enough—the execution is where it gets tricky.
If you feel like “déjà vu all over again,” to quote Yogi Berra, you’re not mistaken: US and international stocks rose during the 3rd quarter, bringing returns in the high teens over the past year, including dividends. Here at home, the stock market’s performance is underpinned by favorable fundamental factors: interest rates and inflation remain low, and growth in per-share earnings remains robust, at about 10% to 12%, year-over-year.
In recent years, one issue that has vexed economists is the rather sluggish pace of U.S. Real GDP growth (less than 1.5% per year over the past decade). What makes this data point especially confounding is that it overlaps a period where several other macroeconomic indicators are trending strongly in a positive direction.
Hardly a day goes by without an article predicting an impending stock market crash. As we reiterated in a recent commentary, now is not the time to chase hot investments. However, we do not profess to have any insights on the timing of the next crash, and we certainly do not advocate selling your stocks or stock funds.
Global capital markets were broadly higher in the second quarter, continuing the trend from Q1. Within our typical client portfolios, 10 of 12 asset classes notched positive returns for the quarter (your own portfolio results may differ – please refer to your Quarterly Portfolio Review Report).