2017: If You Could Fog a Mirror, You Could Make Money

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Is anyone sick of hearing about the stock market yet? With the S&P500 index up 22% (YTD total return), the MSCI EM Index up 36% and the MSCI EAFE Index up 25%, investors may be kicking themselves for holding boring old bonds. But not so fast. Bonds had an incredible year too. Despite accelerating GDP, bond yields – which move in the opposite direction of prices – struggled throughout the year as global investors seeking yield kept up an insatiable demand for U.S. bonds, boosting prices. Safe haven long U.S. treasury bonds are up 8.8%, High Yield is up 7.4% and global bonds are up 7% (YTD total return). Other asset classes were part of the parry. Global REITS were up more than 10% and even gold enjoyed double digit returns up more than 12%. Not too shabby. In addition, a globally diversified portfolio with bonds lowered risk throughout the year and helped you sleep during the North Korea tensions and Washington drama. Although the economic backdrop looks even better in 2018, don’t forget your tried and true pal – diversification. Please watch Doug Cote’s latest comments on the market here.

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