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January 10, 2018

The Markets Performance in ’17 and what to consider for 2018

Welcome to 2018. Time passes more quickly the older I get and 2017 zoomed past. New Years resolutions have not been my thing historically…but I am tiptoeing towards one for 2018…being more communication forward about what’s going on in the 360 Wealth Resources world…here are some thoughts and forward looking ideas to consider.

Key market return* notes…

  • Diversification outside of the US markets offered greater returns.
  • Emerging Markets outperformed Int’l Markets 24% to 37%.
  • US Large Growth outpaced US Large Value markets 27% to 15%.
  • US Large cap markets outperformed the US Small Cap markets 22% to 11.50%.
  • Int’l Small Cap Markets outperformed Int’l Large Markets 30% to 25%.
  • Emerging Markets outperformed Domestic Markets 37% to 22%.
  • International Markets outperformed Domestic Markets 25% to 22%.
  • The DFA International Core portfolio outperformed the Int’l Index by around 3%.
  • The DFA Fund US Core 2 despite being weighted to smaller stocks underperformed the USA market index just 19% to 21%.
  • The DFA World Core portfolio outperformed the World Index 30% to 24%.

*Note that these returns are rounded to closest whole #.

Looking forward…

  • A “Reversion to the mean” opportunity…International markets and Domestic Markets offer the same risk and the returns will equalize.
  • The 5 year average annual return for Markets outside the USA 7% and the USA’s 16% performance offer a significant “reversion to mean” opportunity.
  • The 10 year average returns 2% International and 8.6% USA confirm that International diversification offers a long term performance opportunity.
  • Interest rates are rising for mortgages which were up around 0.50% inn 2017.
  • Shorter term interest have risen for savings accounts as the Fed increase rates 3 times in 2017.
  • 4 of the Banks used for clients short term cash offer rates well over 1%.
  • Inflation is continuing to only inch upwards changing 2.17 from 2016 which had a 2.06% rate.
  • In 2018 one positive form of inflation may move higher as the supply of workers shrink – wage inflation.

Stand by throughout 2018 for perspectives, good ideas and commentary on economic and market issues that offer you an advantage…and if something is on your mind, do share.