Q4 2017 Advisory Commentary

2017 came to a close with equity markets continuing their year-long surge upwards.  The upside bias was given a boost as congress passed the new tax cut & reform package just before the end of the year.  While the effects of all of the changes remain a bit murky at the moment, our opinion is that it does seem to be a net positive for U.S. corporate & small business earnings.  Income tax rate reductions for most individual tax payers should also provide some modest relief to households as well as indicate a slight boost to consumer spending in the near future.

From our perspective, almost all investments in 2018 should be viewed through the lens of a lower U.S. Dollar.  We think you’ll see the dollar continue its overall push downward as this year develops.  President Trump wants it, the manufacturing industry wants it, the shale oil & gas industry wants it, the stock market wants it and in many, many ways the U.S. fiscal situation flat out needs it.  A falling dollar has a highly positive impact on the U.S. government’s future liabilities, as it can continue to inflate its way out of a large part of the problem that it refuses to deal with in any other substantive way.

Along this investment rationale, we continue to hold our long-term position in gold.  We also recently added an allocation to more general commodity exposure, including oil & gas, agricultural commodities and additional precious metals.  While not an overly large percentage of our overall allocation, it should hopefully provide an excellent risk/reward balance as we enter 2018.

Given where the overall equity markets sit regarding their high historical valuations, we think it’s beyond prudent to have non-correlated asset exposure alongside a core equity position.  We see the very real possibility of a “melt-up” in stock prices, which we want to participate in, but also see the equally real possibility of the markets running into a wall constructed of higher interest rates, reduced central bank liquidity and corporate and government debt sustainability problems.


Brian Weckman, RFC
Chief Investment Officer
Actis Wealth Management L.C.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The economic forecasts may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

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