2018 Mid Year Review

     It's that time of year again for me to review the picks made in the 2018 Forecast. Even though I did mention some individual stocks, I now use ETF's and some sector mutual funds to indicate my favorite sectors. The first sector I recommended was the Financial sector and I used the XLF as my benchmark. This ETF is off about 2.25% so far this year. I still like this sector for all the reasons stated in my forecast but the fact is that overall loan demand is low at this time and the fundamentals of the business is in question. To compensate for the slow growth, big banks are planning to return record amounts of capital to investors through stock buy-backs and increased dividends. My second choice was in the energy sector. I  referred to two investments: VDE which is a Vanguard mutual fund and XLE which is an ETF. VDE is up about 7% this year and XLE is up 6%. As expected, energy has stabilized this year and I expect this to continue for the foreseeable future. Another oil related investment was the Alerian master limited partnership ETF symbol (AMLP). This investment has a yield of about 8% but has not appreciated this year so far due to some technical issues within the MLP space. My last recommendation was the XLK, which is the S&P ETF invested in Technology. This fund returned over 9% so far this year. Some analysts  believe that there is some trouble coming to the technology area for the short term. If a trade war breaks out- and it looks like it will, then the global supply chain for many technology companies will be interrupted.
     I am still comfortable with all my recommendations but I am getting a little nervous about the market as a whole. My reasoning is that we are in a historically long bull market and something is bound to end it soon. The old saying that bull markets don't die of old age is true-some catalyst will cause a reversal in stocks and a trade war may be it. There is also the possibility that the Fed will raise rates to a point that causes earnings to decline and investors to jump into fixed income investments like CD's or bonds. Some of my retirement funds have already been moved into the best yielding CD's that I could find through my brokerage account. These CD's are federally insured but don't yield a lot, however, if the market sells-off I will sleep better knowing that my retirement is still on track.