December 2017 Financial Markets Summary

2017 has been a great year so far for investors with domestic stocks gaining over 15%, developed international increasing 23% and emerging markets surging over 32%. Schwab’s Chief Global Investment Strategist Jeffrey Kleintop recently wrote the “5 Reasons for Investors to Give Thanks” during this holiday season.

  1. Stocks have been up every month so far this year measured by the global All Country World Index. If this positive momentum continues through December, it would mark the first time this index has generated positive returns in every calendar-year month since its inception 30 years ago.
  2. Every major economy has grown. The 45 largest economies followed by the OECD have shown GDP growth for the year.  Many of these economies have been in and out of recessions over the past decade, but they are currently all in an expansionary environment.
  3. Earnings have hit a new all-time high. The continued growth in earnings is one of the main reasons why domestic stocks continue to break through their all-time highs since earnings ultimately help drive stock prices.
  4. Stocks have been less vulnerable to certain risks. The past 18-24 months have not been without risk with the Brexit vote, U.S. election, increased tensions with North Korea, rising interest rates and natural disasters.  However, the global stock markets have been very resilient to all of these factors.
  5. The global economy may accelerate in 2018. Kleintop’s leading indicators are not predicting a slowdown and many other economists have been raising their growth expectations.

These five reasons to be thankful remind us of Condoleezza Rice’s quote “today’s headlines and tomorrow’s reality are seldom the same.”  We would love to see this performance continue throughout the world, but we know many risks lie ahead.  The current bull market has lasted almost nine years, stock valuations are becoming more elevated, the Federal Reserve has taken away the quantitative-easing punch bowl and the true ramifications of tax reform are unknown (to name a few).  As the U.S. economy transitions to the later stages of a bull market, we would argue diversification is as important as ever.

Asset Index Category Category Category Category 10-Year
3 Months 2017 YTD 2016 Average
S&P 500 Index – Large Companies 7.1% 18.2% 9.5% 6.0%
S&P 400 Index – Mid-Size Companies 9.7% 14.7% 18.7% 8.2%
Russell 2000 Index – Small Companies 9.9% 13.8% 19.4% 7.2%
MSCI ACWI – Global (U.S. & Intl. Stocks) 5.6% 19.8% 8.4% 2.1%
MSCI EAFE Index – Developed Intl. 5.1% 23.0% 1.0% 1.5%
MSCI EM Index – Emerging Markets 3.3% 32.5% 11.2% 1.4%
Short-Term Corporate Bonds -0.1% 1.6% 2.1% 2.3%
Multi-Sector Bonds -0.5% 3.1% 2.6% 4.0%
International Government Bonds  0.1% 9.5% 1.6% 2.4%
Bloomberg Commodity Index 1.5% -1.2% 11.8% -6.6%
Dow Jones U.S. Real Estate 1.9% 9.9% 7.6% 6.5%


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only.  Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy.  It is provided with the understanding that no fiduciary relationship exists because of this report.  Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice.  PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice.  If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives.  All rights reserved.