The Investor Insight - January 2018

FEW INVESTORS EXPECTED gains in 2017 with a new and unexpected president, near-record low volatility, geopolitical tensions, massive natural disasters, political infighting in Washington, and a tighter monetary policy. The market in 2017 was dominated by a narrow group of companies that comprised most of the gains in the market cap–weighted indexes. As I mentioned in earlier commentaries, value stocks lagged significantly in 2017. As we closed out 2017, with the Fed adding one more rate hike, value stocks started to narrow the gap and the breadth of the markets improved. We expect more of this as we move through 2018. Historically, value stocks outperform during Fed rate hike periods and with valuations stretched in growth stocks, a rotation into the value space seems likely. As of this writing, we are in the longest period in S&P 500 history without a 3%+ correction, with no downward move of that size since November 4, 2016. Read More