What are the biggest risks for investors in 2018? Invstr CEO Kerim Derhalli gives his take

by | 11 Jan, 2018

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January 2018 has seen a continuation of last year’s bull run in stocks so far

Invstr CEO Kerim Derhalli has a warning for investors – despite a stellar 2017 in market performance terms, plentiful risks still lie beneath the surface.

Citing last years bull run in equities, Derhalli said: “The market expectations are for a continuation of the financial market performance we saw in 2017. This is driven by a belief that:

1. The global economy is in an upswing. Europe has finally caught up with and moved past US growth.
2. Corporate earnings are increasing.
3. Emerging markets remain buoyant.
4. The world seems immune to geo-political shocks.
5. Commodity markets are in broad balance.”

Looking to the future, Derhalli added: “These broad expectations ignore the fact that risk changes over time and mask potential issues that may arise in 2018:

1. As the economic cycle matures (this is one of the shallowest and longest expansions since WW2), the risks of greater than expected monetary tightening increase. The Fed is in a rate tightening mode and will start to reduce its balance sheet. The UK has started to raise rates in response to an inflationary spike. Even the Bank of Japan appears to be scaling back its monetary easing. We should not under estimate the reliance of financial market performance on easy monetary policies.
2. The World Bank recently declared that economic growth had peaked and was set to turn down. This could impact prospective earnings growth both in the developed and emerging worlds
3. Tensions in the Korean peninsula will deteriorate as time passes. The North Koreans are intent on building their nuclear capability. It is a matter of time before the US considers that they have reached a point where they pose a material threat to America.
4. Attempts at reform in Saudi Arabia are also accelerating, increasing the possibility of a negative political reaction.
5. The prospect is that volatility, which was subdued throughout 2017, will become more lively as 2018 progresses.

Finally, the success of the crypto markets is generating a reaction from governments and regulators. This fight will only accelerate as the existential battle between the old order and the new age of individual empowerment really takes hold.”

Related: It’s 2018! Here are some geopolitical risks investors should watch out for this year

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

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ALL RIGHTS RESERVED © INVSTR LTD. 2018

Risk Disclosure:
Invstr is a technology platform, not a registered broker-dealer or investment adviser. Invstr does not offer its own recommendations of any security or provide its own research to any user regarding any security transaction or order.
Please note, investing involves risk and investments may lose value. Past performance does not guarantee future results.
Brokerage services are provided by the following:
US-traded securities, including fractional trading, are provided to Invstr users by DriveWealth LLC, a regulated member of FINRA/SIPC. DriveWealth may not establish investment accounts to residents of certain jurisdictions. For more information, including disclaimers, risk and transaction fees click here.
India account traded securities are provided by SIC Stocks & Services PVT Ltd. SIC does not make any personal recommendations to buy, sell or otherwise deal in investments. Investors make their own investment decisions. The services and securities provided by SIC may not be suitable for all customers and, if you have any doubts, you should seek advice from an independent financial adviser. For more information and disclaimers, click here.

 

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