As you know, yesterday was Groundhog Day. Punxsutawney Phil saw his shadow, predicting 6 more weeks of winter.
(photo used under public domain)
Also, the Federal Reserve had a meeting Wednesday and decided not to raise rates, prompting hyped-up headlines like “The Federal Reserve May Have Just Slammed the Brakes On Interest Rates”. As of now, the Fed is predicting 3 potential rate hikes in 2017, but analysts and traders are less optimistic, wondering if Trump’s first week in office signifies a “new normal” for the economy.
We watch these forecasts with interest but we do not take them too seriously. After all, regardless of what a groundhog in Pennsylvania sees, the calendar shows there are 6 weeks left in winter. And regardless of how traders interpret the Fed meeting or Donald Trump’s executive orders, they are no better at predicting where the market will go than a groundhog is at predicting the weather. So rather than acting on market predictions, you will be much better served by acting on market facts.
And the fact is: looking back at January, the markets are pretty much right back where they started. The Dow closed January 31 just 17.67 points down from where it started the year (but up 0.6% on a total return basis), despite all the excitement about Dow 20,000. The S&P 500 is basically flat as well, up 1.9% on a total return basis. So market conditions are fine, but we’re not seeing dramatic shifts one way or the other.
We’re also 1/12 of the way through the year. Have you made 1/12 of the progress you wanted to make in 2017? Where are you with saving and spending? These are areas completely within your control so that next Groundhog Day will not just be a repeat of this year. Take steps to move yourself forward, and when you wake up on February 2, 2018, you will see an even brighter financial picture than you did when you woke up yesterday. And the best part is, it’s completely in your hands—no magic rodent needed.
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