- 1. The market will experience volatility. When the market is down, it will make people feel uneasy.
- 2. Different asset classes will experience different returns. At the end of the year, some of them will be up, and some of them will be down. This will allow for rebalancing between asset classes.
- 3. Prognosticators on TV and in the media will make wild predictions and will focus on short-term outcomes. Very few will be held responsible for such predictions.
- 4. There will be surprises during 2017 which will cause short-term changes in the market. In the long run, these will likely be nothing more than noise. Brexit was a prime example of this in 2016.
- 5. Investors who make changes driven by emotion will be worse off in the long run. It’s basic human psychology to want to sell when things are bad and buy when things are good. A more successful approach would entail doing the exact opposite, but doing so requires a great deal of discipline.
- 6. Those who don’t diversify may pay the price. Since 2000, those who were heavily invested in WorldCom, Enron, Kodak, or Blockbuster saw their investments plummet. As recently as last year, people with large allocations to Fitbit, Under Armour, or Trip Advisor were likely disappointed by their 2016 returns.
The truth is nobody knows exactly what will happen in the stock market, and you should be wary of anyone who claims to have such a crystal ball. Often the predictions of these so-called “experts” are no better than simply owning a low-cost market-based index fund. At Avier, our job is to focus on the things we can control: making sure your investment portfolio is diversified, keeping investment expenses low, developing customized asset allocations that help you achieve your financial goals, and keeping you focused on your long-term plan.
Here’s wishing everyone a happy and healthy 2017!