2017 - Good Across the Board
Welp, here we are shutting the door on another one. I would say this was the best I've ever had but in all honesty I believe the harder years were the better ones. 2017 has been good because of all the things we accomplished in the past, and you could likely make 2017 out to be a bad year if you tried. But first let's look at all the innumerable good things that happened this year.
1. The Markets Kicked @ss!
How did we go from the attitude that "the Dow will never be at 20k" all the way to a kiss away from 25k in 12 months? That is 25% by the way. How is this not the best thing since sliced bread? All while inflation is barely budging except in the energy sector.
I have already had a few people ankle bite the stock market and point out that the DJIA is not a good metric and yadda yadda whatever. I can safely say that no matter what you are doing with the market, 2017 was a good year. If you don't like the Dow then you will probably like something else, because it's all good!
2. Tax reductions passed for mostly everybody
I have railed on this in the past. My problem lies mainly with the 500,000$ interest deduction limit, because in states like California where I live, you can barely buy a 1000sqft apartment for that in some places. I will admit though that this limit will mostly effect upper middle class to rich families in a negative way, while normal middle class and below will not notice a difference. The silver lining here of course is that existing mortgage deduction rates remain unchanged, so if you already have more than 500k in debt, you will be able to keep writing off the interest on it for as long as you hold the loan.
My second problem again is with deductions in high cost states like California. The new limit seems to be 10,000$ max combined deduction between state taxes and state income. I know that this is very easy to blow by in California, but again will likely put the brakes on the upper middle class and above, while not affecting the middle.
Overall in America it seems like many people will owe less and their taxes will be significantly simpler. That's a good thing if you don't live in an expensive state right? Then of course there are the small businesses who are getting a massive rate reduction. We shall see how that plays out...
Inflation has been stagnant. Most noteably the energy sector is more expensive and the car market is cheaper.
Maybe this graph will better line us out on the disparity between the energy sector and the rest:
Really this isn't that bad of news. an average inflation of 2.2% is nothing to scoff at considering the fed has kept the interest rate so low for so long. I will see on occasion some investors try to explain away this phenomena but really nobody has any idea why inflation has remained so low. It is definitely a good thing for now right?
4. Real estate
If you own real estate, it has been good. If you haven't bought anything for the last 4 years, you are likely feeling the burn. Here is a list of good things about real estate nationally from Zillow's awesome summary page that's hard to find.
- National home prices up 6.7% y-o-y
- Average time to sell is down about 10 days y-o-y
- List price/sqft is up about 6% y-o-y
- Rents up 2% y-o-y
National level home data really doesn't do justice to some of the things we are seeing in California or other markets. If you did your homework and beat the markets on real estate, you are doing fine. I feel like there are few surprises here.
5. Your personal life
Hopefully you have been reading our site frequently and engaging your brains. That in itself has led to various improvements in your life right? At least hopefully it will in the long run. I really hope you have a plan for how to get ahead in this world, because the economic engines have really fired up this last year and you will absolutely get left behind if you don't start playing the game soon. Housing will get more expensive, energy will continue to dominate, and the various markets will likely not see 2008 levels ever again. The obvious deals have been removed from the table.
2017 was a good year. 2018 could be better, but if I had to guess I would say that y-o-y the markets will not be as good as this year. I could be wrong, but if you are taking my advice it won't matter because you will do great either way. Goodbye 2017 thanks for all the greatness we miss you already baby!