Well, tax reform is passed. Just needs a signature from the Trumpster. It is often helpful to have a macro view (at least for me) as it helps me be consistent about stock/security picking. My view for 2018, which I have mentioned here before:
- Increased M&A (I am specifically thinking financials).
- Potential for inflation to start moving north.
- Fed will continue to raise rates.
- Increasing earnings, especially for US centric stocks due to tax reform + growth.
- Extremely contentious election season.
So I think it makes sense to not go into bonds/bond-like instruments. Higher rates and inflation potential will weigh on them. I don't really see a recession risk, so I do want to continue plowing funds into market. I do like my gold and small bank plays to capitalize on first couple points. With my MFI stocks, I may focus on slightly smaller companies as they would be more likely to be acquired and will be more US centric.
I sometimes think about selling some of my dividend/income holdings, but will not as I want some balance in portfolio. Just will not buy more. IT is interesting that despite market being up modestly today, my new bond index is down 50 basis points and my dividend portfolio is off 32 basis points.
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2 comments:
How are you thinking about REITs in 2018? They are bond like but should do well with inflation?
I think REITs have a solid place in portfolio. I have SBRA and MAC. It would not be a terrible idea (in my view) to shift out of preferreds or bonds and into REITs. I am kicking that thought around.
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