What a crazy quarter we are closing. Washington chaos and antics, North Korean threats and missiles, hurricanes, uncertain Fed policy, no advancement of legislation or tax reform or healthcare reform or repatriation or infrastructure rebuilding – we encountered all this and more. And in the midst of it all, the Dow Jones Industrial Average hits a new all-time high in the middle of September.
The bifurcated stock markets had stellar stocks and also-rans. Year-to-date results for the FAANMG stocks – an acronym which equates to big-cap tech – are huge. Several thousand other companies whose shares trade in the US markets were laggard performers.
Interest rates also befuddled investors by staying low. And economic growth continued to be tepid. But the Dow marched to an all-time high. Who’d a thunk it?
We end the third quarter of 2017 with a nearly fully invested US stock market ETF portfolio. We favor the financials and have added to the insurance weight. As long as inflation and interest rates stay low and monetary policy remains easy, the stock market can head higher. The key is earnings, and they are improving. Hurricanes mean assistance from the federal government, and that means deficits expand. That is fiscal stimulus coming on top of monetary stimulus.
We expect economic growth to continue for some time and we expect the US market to reflect the added economic activity that comes from replacement and rebuilding post-hurricanes. We think investors will like the results of the fourth quarter of this year and into 2018.