How is it possible that the first half of 2017 is near the end? How did it happen so quickly? It seems like yesterday we were inaugurating a brand new President of the United States and whamo; already there is talk of impeachment.

You’ll not hear of word of that impeachment tslk from investors. For these folks, life could hardly be better.

The market is setting next records. Traders are still calling it the Trump rally in spite of all the troubles and public controversy at The White House. You have to go back to 2000 when the NASDAQ was at 5000 to find both high stock prices and unbridled investment optimism.

The Nobel Prize winning economist Robert Shiller recently stated, “ With a little help from President Donald Trump’s pro-business proposals, it’s not hard to see the market surge 50%”. Wow, that would be truly huge.

This is no off the cuff remark. In 2000 Shiller published the book “Irrational Exuberance” that correctly warned of the overvaluation of stocks and the pending crash. So there is some gravitas here.

Caveat Emptor: Keep in mind Shiller’s most important qualification: the need for Trumps pro-business proposals. There is a world of difference between Trumps proposals and getting any of them through Congress. So far POTUS doesn’t have much of a batting average. 

If you follow Shiller’s advice you will be holding on to your stocks. With still a little time to go before the first half is over, the S&P 500 has provided a return of just over 7% so far. This is almost as good as the market does in a full year.

Technology Good, Oil . . . . Not So Much

And what have been the top performers? By far it has been technology (18%). Consumer Discretionary and Healthcare tied for second at a distant (9%).

For so long the four FANG stocks, (Facebook, Amazon, Netflex and Google, dominated sector performance. But this year it has been semiconductor companies getting the attention. This includes stalwarts like Advanced Micro Devices and Micron Technology as well as names like Qorvo.

Just when you thought everything you touched contained some sort of tiny computer chip, along comes the Internet of Things and autonomous vehicles. These miracles use even more semiconductors that ever.

With all the public awareness of cyber security, names like Symantec, Palo Alto Networks and that entire genre of stocks is making a run for the top. No wonder the group has been a standout for investors.

On the other end of the performance spectrum, investors have been deeply disappointed by energy (-10%) and telecom stocks (- 11%). It is one thing to underperform on a relative basis in a rising market. It is another thing altogether to loose money in one of the more dynamic periods for the market in a while.

The most surprising results come from the financial sector that has risen only a bit more than 1% so far. What makes this so disappointing is the combination of Trump pro growth; anti regulatory rhetoric and the expected increase in interest rates expected this year. Financial stocks have been in the dog house for a long time.

Which Way To 2018

So the next question is, what to do from here. Should you press forward with your brilliant decision back in January to overweight your portfolio with technology or should you finally pull the trigger on some of those deeply distressed bank stocks?

It’s not our business to dish out investment advice so we turned to one group that does: UBS Wealth Management. They are in the camp of market optimists at least for the rest of this year. They think it is time to shift from growth type stocks (like tech) to value type stuff. And guess what, they are particularly keen on energy and financials.

We pass this information along with the reminder that there is always more than one opinion to consider. But when the market is setting record highs on a frequent basis, it is easy to get caught up in the excitement and chase the biggest winning stocks. This is where value investing can save you lots of headaches in the event of a market correction.