Well there are many people talking up the market, and then there are other who say a catastrophic event is on the way very soon. There is accumulating evidence that the economy is very much strengthening, and if this is the truth, that could be very good for the economy and stocks in 2017.
Although we can have a very optimistic view. We must take into consideration TRUMP will be president next year, and no one is really sure what is in store for us. So there are a few simple warnings for investors.
If the bull market continues for the next few months, and does not take a pause. Then what you have on your hands is a market that is vulnerable. Meaning, the higher we go, the more chance we will have of some type of serious correction. If we get higher interest rates, and we have a strong US dollar as well that would be something many investors will be afraid of, so we have to be careful here, to think the market will go skywards every week without some type of pause.
Let’s be honest, since Donald Trump got in, the market shot up fast, and may be getting a little ahead of itself. Think of a helium balloon, once the balloon is fresh with helium it will go up and up, but there will be a point as which the balloon will start to lose its strength, and then deflat and stop ascending.
The equities in the US have been going higher since Donald Trump’s surprising victory. Some have been referring to this as the TRUMP RALLY, or the DONALD TRUMP rally. Maybe this is a coincidence because people are sick of the lies from the democrats and want change. Maybe Donald Trump getting in, could mean a cleansing out for the economy and stock market and that could be a good thing. Time will tell.
What we have to remember is this current bull market could continue, and the reason is due to lower tax rates and a business environment that is much friendly, once Trump is actually in the white house office.
Smart money is already starting to shift to consumer staples and discretionary plays, as well as technology. It seems Donald Trump is going to support these areas, and there could be huge growth potential in the next 4 years. That would be an area some of the smart investors are looking right now as we head towards 2017.
With better economic growth and tax reforms that would mean small- and mid-cap stocks will benefit quite extensively, but if the US dollar was to keep rallying, that would only hurt larger multinationals.