At mid-year, how are your investments doing and what should we expect for the remainder of the year? Certified Financial Planner Paul Fain reviews your portfolio.
PAUL, LET’S START WITH STOCK INVESTMENTS…HOW DID THE FIRST HALF OF THE YEAR GO?
- 7% U.S. Large Companies: The widely-quoted S&P 500 index of large company stocks rallied to a 1.67% gain so far in 2018.
- 7% U.S. Small Companies: The Russell 2000 Small-Cap Index is up 7.66% for the year.
- (4.5%) International stocks: are not faring quite so well. The broad-based MSCI EAFE index of companies in developed foreign economies is now down 4.49% for the year.
- (7.7%) Emerging market stocks: of less developed countries, as represented by the MSCI EAFE EM index, down 7.68% for the year.
WHAT ABOUT CONSERVATIVE INVESTMENTS LIKE BANK ACCOUNTS AND BONDS?
- 5-2% 1-Year Certificate of Deposit
- 9% 10-year Treasury Bond
- 3% 30-year Treasury Bond
OTHER INVESTMENT CATEGORIES?
- 5% Real estate index
- 4% Commodities index
OVERALL, WHAT FORCES WILL INFLUENCE THE INVESTMENT MARKETS FOR THE REST OF THE YEAR?
- Sugar high —the stimulus provided by the recent tax bill—kicked in for companies – economic activity was up nearly 5% in the second quarter,
- Unemployment — has continued a downward trend that could lead to higher wages,
- Federal Reserve Board — has raised short-term interest rates once again, and has announced plans to continue in September, December, next March and next June,
- Escalating trade war — potential problems.
This may be a good time to mentally prepare for an end to the long bull run and to hope it ends gracefully.