Why I can’t wait to sink my teeth into 2017

2017 could be a volatile year for stock markets but Harvey Jones says “bring it on”.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

So farewell 2016, year of shocks, surprises and ceaseless celebrity deaths. We lost David Bowie, Prince, George Michael, Carrie Fisher, Debbie Reynolds and countless others, and were given President-elect Donald Trump and a fat dollop of Brexit uncertainty in return. Don’t assume everyone hated 2016, those who voted for Trump or Brexit will have enjoyed it very much. Investors also had fun.

Good times

Lest we forget, the year began with total meltdown. The market crashed the moment it opened as panic in China infected the world, and in mid-February the FTSE 100 hit this year’s low of 5,557. The index ended yesterday at 7,120, its all-time closing high, a trough-to-peak increase of an astonishing 28%, and a reminder of the rewards of buying shares when everybody else is selling. Over the calendar year, the FTSE 100 is up around 17%. Throw in the current 3.83% dividend yield and you have a total return of more than 20%. A much underrated investment year, 2016. 

That’s one reason why I can’t wait to sink my teeth into 2017. The FTSE 100, S&P and Dow Jones are all now trading around all-time highs, and investment success whets the appetite for more. Yet I haven’t lost my head, I reckon this is going to be a tough year.

Trump bump

First, we face the reality of President Trump, not the fantasy version markets have kidded themselves they’re going to get. Bullish investors have focused on the potential positives, primarily Trump’s much-vaunted $1trn tax cut and spending blitz, which is supposed to mark an end to the age of austerity.

They’ve ignored the potential negatives, such as a disastrous return to protectionism, which might see a trade war with China and across-the-board tariffs on imports. If that happens, today’s market froth could blow off in a moment.

Mayday, Mayday

Then we have the prospect of Theresa May triggering article 50 by the end of March, to begin the two-year process of divorce from the EU. That will pile uncertainty on uncertainty, and perhaps the biggest investment cliché of all is that markets hate uncertainty.

Europe will be a source of trouble in other ways as markets wait to see whether the populist surge will continue in critical elections in the Netherlands, France and Germany. The Greek debt crisis will grind remorselessly on. Italian banking worries could flare up. Anything could happen.

Interesting times

From a political point of view, all of this is worrying, potentially harrowing. From an investment point of view, not so much. I wrote recently that I’ve shunned the Santa rally, because I don’t like investing in markets when they’re touching all-time highs. I prefer the type of buying opportunity we saw last January and February, when top companies and benchmark indices are on sale at massive discounts.

When the inevitable volatility strikes, I will go shopping for more shares to top up my portfolio. I don’t plan to touch the money for 15 to 20 years, so can withstand short-term market swings, and even turn them to my advantage. I hope you can too. Happy New Year, whatever it brings.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »