Investors love to talk about 2017, the “bull market” of 2017, the “Trump Rally”, and any outsized returns accumulated in rise to the SP500’s last all-time high on January 26, 2018. However, as profitable as 2017 was for investors it would appear that the market is struggling to keep up in 2018 – with a current 4 month retrace in market prices. Interest rates, tax plans, and trade wars have all impeded the US market’s growth thus far, and many investors buying into the previous market hype have been extremely disappointed. Quoting one investor whose portfolio remains heavily weighted in US stocks “I am tired of dollar-cost averaging.”
The YTD performance of various countries is illustrated above, showing both the biggest winners and losers. While US markets may have advanced last year many investors neglected to draw attention to emerging markets such as Vietnam, which rose almost 33% (based off the $VNM ETF).
Increasing awareness in international markets has also brought back US investor confidence in the distressed debt markets in the CEE region, and more US investment banks are moving further East of London as well as exploring private equity opportunities in Eastern Europe. Cautious individual investors should also take care to facilitate themselves with proper diversification in their portfolios and to approach their investment with a market neutral position – accounting to potential repercussions from Trumpian politics.
Asset evaluation and selection remains the cornerstone of investment banking and trading, however it may be time for investors to reexamine their portfolio risks and transition to passive investment strategies. While to some investors ETFs may be considered lackluster in performance they crucial in hedging ones positions in what may be the beginning of a US bear market. For those that are interested in leveraging their risks and returns – 3x Bull ETFs will offer the needed volatility while keeping their assets diverse.