After each year I like to look back and review where I was right and where I was wrong. Below is a short list of some of the calls.

Where I was Right: The bull market continued. I am constantly assessing the markets macro movements, looking at the major market drivers to determine where we are in the market cycle. Understanding where we are in the market cycle helps us to position the portfolio accordingly. It was my expectation that in 2016 optimism from both political side in the US would be a positive force for markets, that low, but steady economic expansion would continue, and that investor sentiment would remain at best optimistic. These were all positive drivers, that pushed markets up.

Where I was Wrong: I fully expected Hilary Clinton to win the US presidential election. I wrote here that I thought the most probable outcome was a Clinton win. Sometimes the improbable happens. A good example of why we as investors must always be asking the question “what if we are wrong?”

Where I was Right: Short-term overreactions continued to push markets and created tactical opportunities, but were ultimately unfounded. The beginning of the year saw markets hit correction territory on fears of a slowdown in China and low oil prices. I said here that I believed we were in a correction, not a bear market, and that it was a buying opportunity.

Where I was Wrong: Emerging markets outperformed the markets as a whole, and I positioned managed portfolios with an underweight to emerging markets. As the bull market continues I continue to believe that an underweight to emerging markets is appropriate.

Where I was Right: I was correct in expecting short-duration and corporate bonds to outperform the overall bond market. This was a source of outperformance in fixed income portfolios.

Where I was Wrong: I expected a longer-term correction following a Trump victory. I was expecting at least a week for the v-bottom to form. The downside volatility came, but was literally erased in over the course of one morning and I was unable to take advantage of the tactical opportunities.

Where I was Right: Brexit and the Trump victory did produce very short-term downside volatility, but it quickly rebounded. In both cases I said that it would not be a catalyst for the next bear markets, but rather a correction blip and buying opportunity. Both proved to be true, even though the Trump “mini-correction” was so short lived that I wasn’t able to take advantage with a tactical trade.  

Where I was Right: I expected financials to have a good year in a rising rate environment. We did not get nearly as many Fed hikes as initially expected, but the expectation of more hikes in 2017 and decreased Federal regulation helped make a an overweight to financials a good move in 2016.

                                                                                                                                                 – Wyatt Swartz

2/13/2017