Every year brings changes and new challenges. 2017 will bring more than most.
After eight years of policy stability, America has chosen a leader known for the opposite. So, after eight years controlled by technology, Americans demand growth from resources and manufacturing instead. No one wants to bet against the U.S. economy, but I’m going to hedge my bets. I’ve got too much on the line not to.
Since the 2008 financial meltdown (caused by willfully ignoring economic reality) the Dow Jones Industrial Average has more than doubled. The Nasdaq Composite has nearly tripled. We’re all sitting on fat gains and we all have a lot to lose. With instability in the offing, the trick for 2017 won’t be how to make a lot of money, but how to avoid losing a lot of it.
The best way to do that, investment pros say, is to diversify, even though that didn’t do much good in the past two recessions. But there is a difference between diversifying among stocks and diversifying among asset classes. Ours is not the only economy out there — growth in emerging economies has been stellar lately, and investors who trade actively and manage currency risks have done well in bonds during the worst of times.
In 2017, the U.S. will become more like other economies. Our markets will become subject to wide swings in mood, policies will be unpredictable, and so will consequences. America’s economy is like an aging actress, so the quote from Bette Davis in All About Eve is appropriate. Fasten your seat belts. It’s going to be a bumpy night.