Your investments: 2018 projections

From the new American tax bill to the stability of the shekel, here's what to look our for in the coming year.

By AARON KATSMAN
December 27, 2017 21:40
3 minute read.
Money

Money. (photo credit: INGIMAGE / ASAP)

 
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As I was debating what to write about this week, my office manager said I should make predictions for 2018: “Everyone is doing it; you might as well do it as well!” It was either writing about retirement planning or taking out my crystal ball and doing some forecasting.

The latter won, so here goes nothing!

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Economic boom

The Trump tax cuts will take hold, and the US economy will start firing on all cylinders. Look for 4%-5% GDP growth by the second half of the year. This tax cut will not provide only a short-term economic burst.

Rather, this is a fundamental structural change in tax policy that will have positive ramifications for at least a decade.

Remember when former president Obama spoke about the “new normal” economy with high unemployment and slow growth. In fact, the 2013 Obama budget declared, “In the 21st Century, real GDP growth in the United States is likely to be permanently slower than it was in earlier eras...” Well it won’t be the first time Obama was proven wrong! Look for the growth to spread globally and especially to emerging markets. The US will pull the rest of the world along with it, and countries that are blessed with natural resources will really stand to benefit, and they will help power the global growth surge.

Stock market Volatility will return to markets. The US market will end the year at least 6% higher, but it will suffer a 10% drop during some point of the year.



After years of continued under-performance, look for emerging markets to deliver the year’s highest returns.

Politics

As the economy surges, look for Trump’s popularity to start to move significantly higher. Also look for the Republicans to hold onto control of both the House and Senate.

In Israel, while unjustified, the government will fall, and there will be elections in the second half of the year. Of course the upside of this is that we will get a couple of months with no new legislation from our Knesset members. And don’t forget the day off of work for Election Day.

Shekel

Political instability along with higher US interest rates will impact the shekel negatively. Look for the shekel to drop to 3.84 against the greenback.

Bitcoin

I would look for continued extreme volatility. With the cryptocurrency trading around $15,000 as of now, I would look for it to drop to as low as $7,000 and move as high as $30,000 at some point during the year.

Sports

Look for Omri Casspi, the pride of Israeli basketball, to get an NBA championship ring with the Golden State Warriors. As he has done recently, he will continue to be an important contributor in the team’s championship run.

Look for the Seattle Mariners to be the surprise team in Major League Baseball and win their first World Series crown.

While Brazil will win the World Cup, look for Colombia, Poland, Panama, Mexico, Australia and Argentina to all make a deep run in the tournament. This will be a small reward for abstaining in the UN vote about Jerusalem as Israel’s capital. Had they actually voted for recognizing Jerusalem as the capital, I have no doubt that they would have won.

It goes without saying that this is all in good fun, and no one should make any investment decisions based on any of these predictions. Next year at this time I will only mention these predictions if some of them actually come true. If not, well I can always write another retirement-planning column!

The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc., or its affiliates.
aaron@lighthousecapital.co.il

Aaron Katsman is a licensed financial professional in Israel and the United States who helps people with US investment accounts. He is the author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing.

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