2018 Predictions

At the end of 2016, most analysts were calling for US 10 year bond yields to hit 3.5-4% by the end of 2017. That did not happen. Currently they sit at about 2.35%. Bond traders had a tough year.

Inflation, according to the basket of goods that the statistics folks suggest is "average", has barely budged. Central bankers continue to believe that this is due to "transitory" issues, but are struggling to explain why wages are not going up with improving unemployment numbers (deferring to a lack of productivity as the culprit).

Most clients that I talk to (when we perform their Wealth Forecast reviews) will argue that their respective annual inflation rate (i.e. the increase in their cost of living from year to year)  is nowhere near and significantly higher than what we are told it is supposed to be.

This will certainly continue through 2018.

Central bankers will take heart and continue to focus on the "normalization" of interest rates and monetary policy (take Bank of Canada governor Poloz's comments yesterday as an example), removing financial liquidity from the system.

If the US government increases their deficits with tax reform and increased infrastructure spending and there is less liquidity around to support bond issuance (to pay for all the new debt and deficits), asset prices (bonds, stocks and houses) will fall in price.

I am not even going to try to predict the potential outcome from a breakdown in NAFTA, shifting power balances and possibly a war in the Middle East, the Trump factor, North Korea, China, Russia, cyber terrorism and bubbles.

When asset prices fall (and they inevitably will), investor portfolios and net worth will take a hit. Balanced ETF portfolios, which have been the latest rage, won't be enough to protect them.

Investor apathy and complacency (which has escalated with the prices of stocks with a false sense of security) has allowed risk levels in portfolios to reach lofty levels, significantly higher than most investors actually realize. 

The concept of risk management, which has taken a backseat to passive investing in recent years will move into the spotlight.

High Rock phones will be ringing (as they did in early 2016).

Want to get ahead of the herd, protect your net worth and financial goals before the drama begins (which is how we manage our own money, in the same way that we manage our client's money)? 

We have low cost, fiduciarily responsible, risk and wealth management with tailored, personal investment strategies to suit your specific goals.

Why put your financial future at risk?