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On the surface, it might look as if markets are unpredictable entities moving at random, but there is actually some degree of order that guides the economy. Investors have noted certain patterns in the economy that take place over time, now known as the business cycle. The economy generally goes through several stages – early expansion, middle stage growth, late stage growth and recession. For each stage, certain sectors usually under-perform or outperform. In the early stage, we see consumer discretionary and financials take the lead, while telecommunications and energy lag. In mid-stage growth, technology performs best, while utilities pull up the rear. In late-stage growth, energy and materials are the top performers, while technology and consumer discretionary take the bottom. And finally in the recession phase, utilities and consumer staples tend to do well, while cyclical sectors like industries and technology fare poorly. A closer look at expected sector performance In order to get an idea of what sectors might perform well in 2018, we first need to determine where we currently are in the business cycle. For 2017, the… Read more

Diversification is arguably the most cited rule for investors to follow when building a portfolio. It reduces the risk of a single event or under-performing sector to derail your entire investment portfolio. It follows the adage, “don't put all your eggs in one basket.” Once you have a mix of stocks in your portfolio ranging in size and industry, you might think you have risk successfully under control. But regional risks associated with a single country or economy can cause entire markets to fall. In order to alleviate regional risk, you'll need to expand outside of the country to include international investments. Looking Overseas Investing overseas can seem like a daunting task. After all, while you might be familiar with many of the names in your domestic portfolio, trying to choose a company from overseas you've never heard of seems like an unwise decision. Unless you're fairly familiar with a certain region, it's probably best not to try and pick individual stocks outside of the United States. Not only will you not know the brands or trends, but foreign companies… Read more

If you're a new investor and looking to get started with your first mutual fund, then congratulations – you've taken the first step towards financial freedom. But with more than 9,500 mutual funds to choose from, trying to screen for just one can be seem overwhelming. It's almost enough to stop you dead in your tracks before you get started. Don't get discouraged just yet though, there's an easy way to find the right fund for you. You only need to know a couple of key metrics and you'll be building your first portfolio before you know it. Mutual fund basics A mutual fund is a great beginning investment for an investor at any age. These investment vehicles are like a basket of different assets all in one package. They often come with active management, as well, so holdings change over time to hedge against economic downturns and take advantage of growth opportunities. Mutual funds can also be started with small monthly investments, as well, making them perfect starter portfolios. Mutual funds offer a lot of advantages to beginning investors and… Read more

Market optimism is at an all-time high based on investor sentiment. The markets have entered the new year at record highs, while the current bull market is now the second longest in U.S. history. Yet no one seems to be uncertain about where its headed. There's no evidence of hedging in the markets or bearish sentiment anywhere. A survey by Investors Intelligence revealed that 64.4 percent of investors expect the market to keep moving higher, while just 13.5 percent expressed more bearish thoughts. But some analysts view this overconfidence as a dark omen. The last time the spread between bulls and bears was so wide was right before a stock market crash in 1986. In other words, it could be the calm before the storm. The only thing we have to fear is a lack of fear altogether One way investors can get a sense of risk and uncertainty in the markets is to look at the CBOE Volatility Index, affectionately referred to as the VIX. Typically, a level of 20 or more means elevated risk in the markets, while anything… Read more

The Federal Reserve raised interest rates three times throughout 2017 with the current benchmark rate between 1.25 and 1.50 percent. The sharp uptick in bond yields towards the end of December could be a harbinger of things to come and investors are gearing up for a possibly volatile year. The yield on the 10-year treasury is currently around 2.50 percent – a large gain from where it stood just a few weeks ago when it was in the 2.30 percent range. The threat of a larger deficit and expanding economy means rates may have only just begun to rise. As we head into the new year, the big question that looms is what actions will the Fed take and where will interest rates end up? Interest rates and the economy There's some disagreement about how interest rates actually impact the stock market. Typically, a higher interest rate translates to lower stock prices because companies pay more for loans and operations financing, thus negatively impacting earnings. But in practice, it seems higher interest rates don't have a long term impact on markets in… Read more