While 2016 may end up looking a lot like 2015 in terms of stock market returns in the U.S., intermittent periods of stock market volatility, endless debates over potential Federal Reserve interest rate hikes and overseas economic uncertainty, we believe that there will be some unique twists in 2016 that were not present in 2015. As a result, we suggest positioning portfolios to both take advantage of a gradually rising interest rate environment and the likely “passing of the baton†from U.S. equities markets to international equities markets in 2016 in terms of return potential. Additionally, with the long awaited initial rate hike behind us, we believe that investors should now consider areas of the market that historically have benefitted from previous periods of gradual tightening attractive, such as REITs and Energy. Finally, 2016 is also a presidential election year, which should not be ignored in terms of the associated, potential market implications of this process.
Here is a current summary of our seven (7) key forecasts for 2016 based upon data available to us at this time and subject to change:
