2017: The easiest year to make money since 1997?
So far, at least, 2017 has proved to be an extraordinarily easy year to earn profitability by looking at the entire historical series with the data on the table.
Earning money is always the main task that investors are looking for to increase their equity. Generating savings is what drives them to enter the markets. So far nothing new. The determining factor is, observing the course of the exercises, if this year is being attractive in terms of cash generation.
The reality is that, despite a recent wave of anxiety-provoking events, many major assets are significantly higher in the year. The S & P 500 has risen 10% so far this year, with gold futures up 16% and US Treasuries at 10 years (judging from the popular bond index Barclays' long-term Treasury) have gained 6%. Quite revealing considering the fears that abound in the different world squares.
Right now there are four months left to finish the year and if nothing is wrong there is a clear conclusion. And, if 2017 ended today, it would be the first year the three have increased by more than 5% since 1993, according to a CNBC analysis. That is, something never seen in more than the last 20 years.
To be sure of all this, there is something a bit strange about concurrent meetings. American stocks and Treasuries are considered classic investment alternatives, whose demand reflects the economic optimism, and the demand of the latter reflects a momentum of refuge. Gold is always seen as an asset that has entered money in times of increasing fear and rising inflation; fear tends to be bad for stocks, and inflation is generally bad for bonds.
Given the contrary nature of its bullish drivers, it is no wonder that stocks, bonds and gold do not tend to move significantly higher at once. This year, the rally of these three assets reflects "an environment of light to moderate economic growth," said Oppenheimer's Ari Wald.
In other words, the economy is strong enough to help businesses make more money and thus keep their bonds up in the markets, but inflation that is proving more moderate than expected is protecting the bonds.
"The fact that all these asset classes are working is telling us something," said portfolio manager Mike Binger of Gradient Investments in Trading Nation. What seems quite clear is that in these moments we are faced with a rather atypical situation.
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