The current U.S. economic expansion, which began nearly eight years ago, will soon become the third longest since 1900.
- At the end of March, the expansion will officially turn 93 months old – nearly twice as long as the average expansion length of 47 months. However, expansions don’t die of old age, and there appears to be plenty of reason to be optimistic about the near-term outlook for the economy.
- Job creation remains robust and wages have also been edging higher. The Fed has assumed a more hawkish stance in anticipation of stronger economic growth, determining that the economy may finally have the needed momentum to justify higher interest rates.
- Positive economic fundamentals and expectations for favorable tax and spending policies from the Trump administration have increased investor optimism, pushing equity markets higher. However, if lofty expectations fail to materialize, investor sentiment could dim and leave equities vulnerable to a pullback.
- In this environment, we recommend that investors take stock of their situation and reaffirm their long-term goals, objectives, tolerance for risk, and desired asset allocation. Within that context, higher stock prices may create opportunities to rebalance portfolios, reduce debt, and/or make charitable gifts using appreciated securities.
- As always, having a plan – and knowing what that means in terms of action regardless of market conditions – improves one’s probability of success over the long term.