After global and U.S. stock market advances in the first quarter of 2017, we remain overweight equities – but less so than a year ago, due to increasing risks. Our portfolios are also slightly overweight cash. This is not a long-term strategy, but rather for investment opportunities which might present themselves in the short-term. Here are our key takeaways from BWM Financial’s most recent Market Outlook Webinar:
- Pros: Continued positive economic data has supported the U.S. and global equity markets. Inflationary pressures are building as the economy recovers. However, there is still room for stock prices and bond yields to rise in tandem. Strong earnings growth and the potential for corporate tax reform both bode well for equity prices going forward.
- Cons: An unpredictable U.S. administration means uncertainty for investors. After President Trump failed to replace the Affordable Care Act last month, many now question his ability to deliver on other promises, such as tax reform. Additionally, if economic growth and inflation accelerate, the Fed could move quickly and raise interest rates again.
Our strategy for the remainder of 2017: Remain flexible. We will continue to closely monitor our indicators to dictate the best course of action based on the weight of the evidence. Extra cash can either be put to work if opportunity presents itself; or it may cushion against volatility as further cuts to equity exposure are warranted.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.