Friday, January 5, 2017
9 Things to Watch For in 2018
With 2017 in the rear-view mirror, one thing we can all agree on is that it was covered in a glaze of uncertainty. The world seems like it is a scary place out there, more and more reason to not watch the news. If you are not a daily news hawk like me, you missed a very confusing year. It had its ups and downs like every year and left us wary of what was to come. In 2018, the financial world will experience much of what the other areas do. There were some unanswered questions that will carry over into this year that hopefully, we will now be able to solve. Today I am giving you my 9 things to watch for in 2018. They are in no particular order and all will have an impact on our bottom lines.
1) The Canadian Housing Market
This past year saw the Canadian Housing Market hit records levels. We saw two massive booms in both Toronto and Vancouver, but also many smaller booms hitting other cities. The explosion even trickled into little London, Ontario with houses being pushed out with multiple bids. The concern for me is two-fold. Firstly, with every boom, there is usually a subsequent bust. Now I don’t think the market will fall flat, but I do think it will cool off as the feeding frenzy dies down. This is already apparent in the months on October and November. The real test will be next spring which always tends to be the busiest time of year for home sales. Secondly, with many people buying homes well above asking price in the past year, I hope that they maintain their purchase value. If someone has overstretched their own purchasing power for the sole reason of buying a home, they could find themselves in the position of being over budget as interest rates rise. If home values decline as well, it could be a recipe for turmoil. The government seems to have taken steps to curve this possibility with the new stress-test for mortgages, but only time will tell if the test is a good thing or will only hinder growth.
2) Cryptocurrency
The end of 2017 saw the explosion of Bitcoin and other forms of cryptocurrency. As technology advances and the accessibility of this form of money becomes more available, what will the outcome be for average people? Many call Bitcoin a speculative bubble, based on nothing and awaiting its inevitable burst. While I have a basic understanding of how it works, I don’t have the full knowledge of it as to predict its future. The truth is no one does. I look to 2018 as the year where Cryptocurrency will come to the forefront as reveal itself as a true entity or fraud like many believe. I am going to play the wait and see on this one and I would advise you to as well.
3) The Running of the Bulls
We are in the midst of one of the longest bull markets in stock market history and it has many wondering when will it end? Many analysts predict that the market is overdue for a correction, giving back some of its gains over the last 8 years. Despite the prevailing thought, there are some who think the good times may continue for several years to come. Strategist Jeff Saut believes there could be up to 9 more years left of market growth which would be unprecedented. My thoughts fall under the cautiously optimistic realm, hoping for more growth but understanding that a correction is inevitable. It is important for investors to take some time to evaluate their risk tolerance and most definitely their time horizons. Understanding both of those areas will help weather any storm or sunshine that may come in 2018.
Strategist Jeff Saut: The 8-year-old bull market still has up to nine more years left – CNBC
4) Canadian Marijuana Industry
2017 saw the explosion of marijuana stocks into the Canadian Market. Names like Canopy Growth and Aurora Cannabis have become as popular as Tim Horton’s and Starbucks. This growth has all been predicated on the promise of Justin Trudeau’s platform of legalization during his election campaign. 2018 will be a defining year in the marijuana sector as Canada will either inch its way toward legalization or stall into the foreseeable future. There are still many hurdles to jump, but in my opinion, the legalization and commercialization of pot are very likely. To me, it is not a matter of if, but of when. There is just far too much tax money at stake to let this one slip through the cracks.
5) The Trump Effect
I will try not to get too political here, but it has become blatantly clear that President Trump has great power in shaping financial outcomes while he is in office. Whether it is through his recently passed tax reform that could make American markets more attractive for foreign investment or his challenging of foreign leaders, disrupting the world order, he is not playing by the old set of rules. With his protectionist policy, Canada will be greatly affected and will have to cope with the outcome. Another strong possibility is the emergence of a new war with either North Korea or even Iran. These possibilities have the power to disrupt financial systems and make both our economies reel. Look towards the 2018 Midterm elections in the US as an indicator of America’s feelings towards the current administration. Like the man or not, the stock market in the US has risen dramatically during his first year in office. Time will tell if this was his doing or a result of broader trends already in place from the previous administration.
6) Provincial Elections in Ontario
This coming year we will be electing a leader here in Ontario. No matter where you stand on the political spectrum, it is clear that Ontario is the economic driver of Canada. Sadly, over the past 20 plus years, we have seen many poor decisions when it comes to our provincial government. This election will be seen as a referendum on past decisions. Will Ontario re-elect Kathleen Wynne or step towards a new direction? The results could prove either costly or profitable for the province’s future. Let’s hope that whoever our government is by 2019, recognizes the importance of their role in making our lives better in the coming years and decades.
7) Automation
Over the past few years, we have seen technology play a growing role in our every day lives. While we are losing many jobs in the manufacturing sector, we are also gaining many jobs in the computer technology sector. With companies like Google, Amazon, and Facebook all vying to make their presence known in Canada, jobs in the tech sector are sure to continue to pour in. The real question is do we have the people to fill these jobs? Going into my last point, I think it is important for our local, provincial and federal leadership to understand that the economy is changing at a rapid speed and it is important for us to keep up with these changes. Ontario has the potential to do this as long as the politicians and the populace are willing to join the fray.
8) Wage Increases
This week Ontario saw its minimum wage increase in part of a plan that will see it go to $15 an hour by January of 2019. No matter what side of the fence on this debate you are on, everyone can agree that we don’t wish small businesses to suffer from the wage hike. We also don’t want the cost of living to dramatically increase because of it as well. What the hike was intended to do was give a better standard of living to those on the bottom brackets of society. Only time will tell if it does that without disrupting the greater economy. My hope is that the wage hike brings more people into the active economy by putting my money in their pockets every month. By this time next year, we should know how the first roll-out went.
Small business owners brace for impact as Ontario minimum-wage hike takes effect – Globe and Mail
9) Canada Abroad
With America seemingly slipping into isolation, our Prime Minister has made a point of looking abroad to strengthen our trade ties. The proposed NAFTA shifts and protectionist styles of governance in the US have forced Canada’s hand on this matter. There is no doubt that the US is Canada’s greatest ally, trade partner, and friend in the world. If that relationship slows down, due to no fault of our own I might add, what will be the outcome for our country? Can we maintain our ties with a stubborn regime in America while still protecting our interests at home and abroad? Look for 2018 to answer many questions regarding where Canada stands in its trade policies. Hopefully, we can continue to grow without losing what makes us such a special country.
I look for 2018 to be a year of many nagging questions being answered, but also many more being asked. I believe during times of uncertainty it is important to stick with known entities. These include community, family and a bedrock of solid financial practices. Ultimately, if you put yourself in a solid position, the outside noise will not affect you that greatly. That to me, is true financial freedom.
Thanks for tuning in today as we wrap up 2018 Kickoff Week at Budget Boss. Be sure to send me a message at joe@budgetboss.ca if you wish to make your 2018 your best money year yet. Have a great weekend Bosses!
“We cannot solve our problems with the same thinking we used when we created them.” – Albert Einstein
Email – joe@budgetboss.ca
Follow Budget Boss on – Facebook LinkedIn Twitter Instagram Pinterest Quora