Broker Check

2018 Investment Outlook and Updated Tax Changes

January 25, 2018

Dear Friends, Colleagues, and Clients of IIS Financial Services, 

At the beginning of every year, we like to review the factors that influenced the financial markets during the previous year, look ahead to what we can expect this coming year, and update you on some key items such as the new tax changes that will take place this coming year. 

2017 In Review: 

2017 delivered impressive returns across stock markets for US and International. Both markets benefited from positive economic conditions with world GDP growing about 3.6% and growth in the US accelerating above 3%. The earnings picture accounts for half of the gains in US markets last year. The 2017 tax legislation, anticipated by investors since the start of Q3, accounts for the other half of investment returns. 

In addition to sizable gains, there was also very little market volatility in 2017. The S&P 500 only had 8 days when it lost or gained 1% or more. In 2016, the index had 48 days with at least 1% movement, and 2015 had 71 such days. With high growth and low volatility, it's little wonder that consumer confidence has reached its highest levels in 17 years. However, considering we are almost 9 years into this historic bull market, can the growth continue? Below are a few economic indicators to examine where we are and what might be on the horizon.

Economic Highlights: 

  • Gross Domestic Product: Economic growth picked up in the 2nd and 3rd quarters, and analysts believe the expansion could continue in 2018. 
  • Labor: The unemployment rate dropped to 4.1% by October 2017, and some analysts believe it could fall even more in 2018. 
  • Inflation: While inflation is below the Federal Reserve's 2% goal, the most recent readings show a healthy increase. If inflation continues on this path, the Fed will likely continue to slowly increase interest rates in 2018. 

What To Expect In 2018: 

Our Broker Dealer, Cetera Advisors LLC, provides us with investment research and portfolio model management. Below is a link to our website that includes Cetera's 2018 Market outlook. It discusses the positive momentum in the global economy along with the potential impact on the financial markets. There are also sections on the primary risks that may impact the global financial markets in 2018 and, most importantly, key investment implications. As always, it's best to treat market predictions with caution as projections this early in the year are always nebulous.

2018 Stock Market Outlook

Tax Changes In 2018: 

Many people are wondering how the new tax plan will affect them. Some will pay more and many will pay less. On January 1, a number of changes went into effect, including new tax brackets for citizens (see links below) and a permanent tax rate reduction for corporations. As a result, this law may impact both economic performance and your individual bottom line. 

Complete Guide To The New 2018 Tax Plan 

2018 Tax Rates And Financial Data Charts

What This All Means For Your Portfolio: 

Part of our job as Financial Advisors is to stress the importance of being comfortable with your portfolio. One of our main goals is to help you accumulate wealth without taking on undue risk. Markets rise and markets fall, but unless there have been changes in your circumstances or you've hit milestones in your life such as retirement, stay with the plan. By itself, a long run in stocks isn't a good reason to bail out of the market. Be comfortable with the level of risk you're taking as we set out to meet your objectives and overall financial goals. 

Please contact us and let us know if major changes have happened or are about to happen in your life. We want to make sure we are meeting our clients' expectations and part of that is making sure their financial portfolio matches up with overall goals.  

Hopefully you found this review helpful. Let me emphasize, it is our job to assist you! As always, if you have any questions or concerns about the financial markets, how the tax plan will effect you or your own personal financial situation, please give us a call. We are honored by the trust you place in us and look forward to serving you in 2018!

David Hanson & Carl Hanson, CFP®