Fourth Quarter and Full-Year 2017 In Review

Goodbye, 2017!

Every year seems to pass more quickly than the one before it. 2017 was no exception. Let's take a look at what happened in the financial markets.

Q4 and Full-Year 2017 Numbers

The most commonly used benchmark, the S&P 500 Index, had another strong quarter, up 6.64%, which means the S&P 500 ended up 21.83% for the year. Not bad.

The average diversified U.S. stock fund, which is a better measure of how we invest than the S&P 500 by itself, gained 6.0% during Q4, putting domestic stock funds up 18.3% for the year. Investors, still wary of high valuations in U.S. stocks and a long bull market, are exercising caution, with $38 billion flowing out of stock funds during 2017.

The average diversified international stock fund gained 4.9% in the fourth quarter. This gain put international stock funds up 26.8% for the year. In a sign of investors' preference for foreign markets over domestic, $233 billion flowed into international stock funds during the year.

The average intermediate-term bond fund returned 0.4% during the fourth quarter, which put them up 3.6% for 2017. A whopping $379 billion flowed into bond funds during the year, likely due to concerns about the valuations of U.S. stocks.

Managing Expectations

The financial crisis may not have reached rock bottom until March of 2009, but it kicked into high gear in September of 2008. That means later this year it will have been ten years since the start of the crisis. We've experienced great returns since then. Well, I hate to be "that guy", but I'm going to remind you that markets don't always go up.

Those of you who read or watch Game of Thrones are familiar with the phrase "Winter is coming". For the non-nerds here this basically means one should always be prepared because the good times, or in this case, good returns, won't last forever.  Fortunately, we're only talking about investment returns, not White Walkers marching south with an army of the dead. And an undead dragon.

I wish I could tell you exactly when a correction will occur. I can't, but I'm bound to be right eventually. In the meantime, we can be thankful for years like 2017. In addition, we can "prepare for winter" by rebalancing our portfolios, maintaining a sufficient emergency fund, and sticking to our financial plans.

New Year's Goals

Goals, resolutions, or plans. I don't care what you call them; I think it's good to kick off the year with a few ways to challenge yourself. Here are my goals for 2018:

  1. I will draw and paint again. In fact, I just relaunched my videogame-themed art website,, where I'll post regular updates on my work.
  2. I will continue my Crossfit and yoga regimen. I started this routine in September of 2017 and I feel great. Bonus: No more back pain.
  3. I will pay less attention to social media sites like Facebook and Twitter. Social media is a vampire that sucks your time instead of your blood. I think we'd all be better off spending less time on those sites. Read a book. Play a board game. Paint a picture.

I hope you set some goals for yourself!