Q4 Review: Trump, Taxes and Ticker Gains

in Market Commentary by

If there’s one thing we learned in Q4 of 2016, it’s to expect the unexpected. November ushered in a new president, one whom very few expected. The market reacted to this surprise in a way that was also unpredicted, with U.S. stocks responding favorably. And lastly, as we forge ahead in the new year, we’re entering a time of uncertainty when it comes to capital markets.

Many investors are currently drawn toward U.S. stocks, thanks to the unexpected rally in November and the eighth year of a bull market. With the new administration, we are facing new regulations and tax changes. It remains difficult as usual to predict anything with certainty; this doesn’t necessarily mean anything bad – it just means that there will likely be bigger moves in either direction. The first year of a president’s term has historically been the most volatile part of the presidential cycle. But as always, it is important to remember that stocks go up more than they go down.

The good news is, we don’t need to fear the unknown, as long as we prepare for it. We think that at the end of the day, the best way to expect the unexpected is a diversified approach to prep you for whatever may happen in the new year and beyond.

In this report, we’ll discuss the potential market implications in the first year of a Trump presidency.

Key insights from this Q4 review include:

  • The potential for tax reform as early proposals from Trump and the House GOP suggest meaningful tax cuts for the highest earners and a modest change for most other taxpayers.
  • There is a greater fear surrounding bonds, which we think is excessive. The appropriate mix of bonds should continue to provide portfolio stability.
  • Personal Capital managed portfolios performed well. Returns for both the quarter and year compared favorably relative to similar blended benchmarks of traditional indexes.

That’s not all that happened this quarter. To learn more, check out our newly released Fourth Quarter, 2016 Market Review and Outlook.

The following two tabs change content below.
Craig Birk, CFP®

Craig Birk, CFP®

Craig Birk is a member of the Personal Capital Advisors Investment Committee. He also serves as Vice President of Portfolio Management. Prior to Personal Capital Advisors, he was an integral leader within the portfolio management team at Fisher Investments. During Craig’s time there, the company increased assets under management from $1.5 billion under management to over $40 billion. His responsibilities included risk management, portfolio implementation oversight, and management of all securities and capital markets research analysts. Mr. Birk graduated from the University of California at San Diego and has earned the Certified Financial Planner® designation.
Craig Birk, CFP®

Latest posts by Craig Birk, CFP® (see all)


Leave a Reply

Your email address will not be published.

Disclaimer. This Website may contain links to third-party websites. These links are provided solely as a convenience to you and does not imply an affiliation, sponsorship, endorsement, approval, investigation, verification, or monitoring by PCAC of the contents on such third-party websites. Please be advised that PCAC is not responsible for the content of any website owned by a third party.