We’re about done with the first month of 2017 and things seem a bit rocky, both in politics and in the market. You could say that the two have been going hand in hand recently ever since the election and so called “Trump rally” that boosted the DOW past 20,000. Whatever the case may be for the rally I have some select sectors that should outperform in 2017.
Information Technology – Outperform
IT has been in analysts outperform lists for years now, and there’s no real change for 2017. If anything there’s been some that say tech is still playing catch up with the rest of the market and what happened in 2016 with expectations that tech will surge in 2017.
I’ve got tech outperforming as well. We are still in the early stages of a long term tech boom for stocks. It’s not going to be all the way up from here, but I’d expect tech to outperform for many years going forward.
Still not convinced? How about if I told you the last time Schwab changed their sector view on information technology was back in April of 2010? That means they’ve had IT in outperform for the past 7 years. None of their other outperform sectors come close to that year. You’d have to go back to 2013 for a market perform that hasn’t changed (Materials).
Financials – Outperform
Expect financials to do well in 2017. The Trump administration is supposed to help out business with tax breaks that should hopefully spur more spending from these same companies. More spending should also mean more borrowing from banks.
Let’s not forget that interest rates are expected to continue to rise in 2017 with a few interest rate hikes already scheduled for the year. The too big to fail banks have been on a tear in the past few years and analysts expect this trend to continue in 2017.
Healthcare – Outperform
The healthcare industry in the US is going to get a big shakeup this year as the Trump Administration tries to repeal Obamacare. What exactly will happen is still unknown, but the sentiment is that the companies will benefit the most partly at the expense of the consumers and businesses.
The idea behind it is that the Trump administration wants to encourage a free market and competition. The competition should bring about more drugs and solutions for people’s problems.
Let’s not forget that the US has an aging population that is living longer. There’s going to be a lot more people that need healthcare this year than last year. This should be a given, but if you take that with the fact that the healthcare sector has been lagging recently then you can say that it might be time to “buy the dip” and get in on this sector for 2017.