(B) Did your financial adviser ever tell you that your 401K portfolio will grow on average by 7% a year? Well in 2017, with a diversified portfolio invested in domestic and international stocks, your return should have been above 20%! Last year stock rally was quite impressive and quite broad from domestic to international stocks, and from large to mid, and small-cap stocks. While during the first half of 2017, international stocks were the winners, during the second half of the year, domestic stocks were the winners. But, from June to December, international stocks keep the gains that they acquired from January to June. The only stocks that did not participate in the rally were domestic real-estate stocks, as interest rates in the US are rising. Using Vanguard ETFs, following are last year exceptional returns:

• Domestic equities:
  • Large-cap (VV) : 21.99%
  • Mid-cap (VO): 19.25%
  • Small-cap  (VB): 16.24%
  • Dividend-appreciation (VIG): 22.21%
  • Nasdaq (QQQ): 37.04
• International equities:
  • Large-cap (VEU): 27.37%
  • Dividend-appreciation (VIGI): 28.01%
  • Mid and small-cap (VSS): 30.64%
  • Emerging markets (VWO): 31.48%
• Real estate:
  • Domestic (VNQ): 4.90%
  • International (VNQI): 27.02%

Economic growth with unemployment plumbing to 4%, favorable monetary (low-interest rates), and fiscal environments (lower corporate tax rates) have fueled the stock rally in the US. But worldwide asset prices have been on the rise for a long time due to central banks around the world implementing aggressive monetary policies in response to the financial crisis in late 2007 and 2008.

So what will be the returns for 2018? To explore…

• The New York Times has published an article about the duration of this and previous bull markets
• Bob Pisani from CNBC in his blog believes that there is a slight whiff of euphoria “Trader Talk: Everyone is starting to like the market, and that’s making some traders nervous“
• And Wall Street veterans’ Art Cashin and Byron Wien have proposed their predictions for 2018:
  • Art Cashin’s outlook for 2018: China, the Fed, and bitcoin among his biggest worries for the new year
  • Byron Wien’s Ten Surprises for 2018

Note: The picture above is Mumm’s Cordon Rouge champagne.

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