Ken Morris: Some thoughts about the market and a bit about Bitcoin.

Like so many other people I saw a lot of my family and friends over the Holidays. Naturally, a lot of conversations ensued, and they inevitably lead to the topic of investments.

Not surprisingly, the same two questions seem to dominate. “Will the stock market continue to rise in 2018?” and “What’s up with Bitcoin; should I be buying some?”

As a financial advisor, I help families prepare a blueprint that establishes goals and identifies the investments that will put them on the right path to achieve those goals.

A major part of selecting investments is staying within the parameters of a client’s risk tolerance. Many people will tell financial advisors they can handle a certain degree of risk, and they very likely can.

But the moment the investment world turns south, many of them want to abandon their investment objectives and move into cash. More often than not this turns out to be a mistake from a long-term point of view.

As far as 2018, nobody can say with certainty that the stock market will continue on its torrid pace. Most economic indicators point toward continued growth, but I don’t believe investors should count on a repeat of 2017.

Based on history, bull markets do not simply die of old age. Rather, there is a triggering event that turns optimism into pessimism. In other words, the stars may be aligned for a repeat of 2017, but there are a number of things that could derail the party.

I don’t want to be an alarmist, but issues with North Korea or Iran could change the investment climate. Suddenly and dramatically. More subtle issues, such as inflation or underfunded state pensions could also spur a sudden change in investors’ mindset.

Because we don’t know what the investment world will bring in 2018, I recommend reviewing your financial blueprint now. If at the end of 2016 you were comfortable with fifty percent of your investments in growth stocks, go back to fifty percent in growth stocks.

In simple terms, that means taking some of your gains off the table now, when all is good. I would much rather see investors think though their investments and make any necessary adjustments in a positive scenario, rather than panicking when we hit a bump in the road and then making knee jerk investment decisions they might later regret.

The bottom line is to put yourself in a position to benefit from continued growth, but don’t bet the farm that the growth will continue.

I personally remain optimistic about 2018. But I’m realistic enough to realize things can change in a hurry.

As far as Bitcoin, I can’t even consider it an investment at this point in time. It’s nothing more than a speculation. Many experts draw parallels to the tulip mania that swept Europe, especially the Netherlands, in the late 1700s. A lot of fortunes were lost.

By definition, speculations are risky; that’s why regulators warn against Bitcoin. The way I see it, investing in any kind of currency is high risk. Putting your dollars into an unregulated digital currency that’s backed by nothing is a path I would strongly urge you to avoid.

In short, I believe investors should remain grounded with their expectations for 2018.

Fax your questions to Ken Morris at 248-952-1848 or e-mail to ken.morris@investfinancial.com. Ken is a registered representative of INVEST Financial, member FINRA, SIPC and is Vice-President of the Society for Lifetime Planning in Troy. All opinions expressed are those of Ken Morris. INVEST and Society for Lifetime Planning are independent companies