As we reflect on what has transpired throughout the world in 2017, we cannot help but wonder what lies on the investment horizon in 2018. With both the stock market and bitcoin ending last year in very fine fashion, investors are wondering if 2018 will be the year these bubbles burst, or will prosperity continue to reign. Regardless of analysts’ forecasts, the investment community is growing concerned, and preparing their portfolio for the worst-case scenario.
Enjoying an unbelievable performance in the past year, Wall Street in the United States has repeatedly shocked investors. In 2017, the Dow raced 25 percent higher, getting even closer to 25,000 and making this year its best since 2013. The S&P 500 and Nasdaq also had their best years since 2013. The broader S&P 500 rose 19 percent, and the Nasdaq jumped 28 percent.
The stellar year on Wall Street was particularly unusual, in that it lacked the sharp retreats that often accompany strong rallies. At nearly nine years old, the Bull Market is now the second-oldest and second-strongest in history. Analysts and economists are suggesting that the 2017 market rally is a sugar high that might deepen the rot in the U.S’ economic cavity. In other words, prepare for stocks to make a sharp correction in 2018.
My thoughts on bitcoin are best shared using an analogy. When riding a roller coaster, there is always a point where the ride rises sharply. This is where the bitcoin market is currently. The trouble is that we all know there is going to be a fast and terrifying drop on the other side of the climb. I believe a sharp fall is what investors can expect in 2018.
For those that remember the dot.com bubble approximately 20 years ago, there are similar parallels with the current bitcoin market. It is fun and exciting, like a roller coaster ride, but the momentum is unsustainable.
To avoid the potential dangers of traditional investments, and sidestep a financial crisis, many investment-seekers are choosing to pursue investments outside their traditional options. Since the global market crisis in 2008, the investment community has begun to introduce alternatives to their investing portfolio. This approach has proven to offset any losses that are incurred in the stock or bond markets and keeps investors on track to reach their investment goals.
Alternative investments have taken on many forms in the last few years. From hard assets like shipping containers, to private equity, collectibles, and ETFs, non-traditional investments are becoming more appealing and more accessible to investors. Because of this, I expect that the popularity of alternative investments will continue to rise in 2018.
As tempting as it may be to invest in the stock market or bitcoin, investment-seekers should resist the urge. Their slow and steady rise to record highs is sure to be followed by a sudden and unexpected drop. To avoid a financial crisis, investors can find safety in alternative investments.