Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

Market Insanity

Investments to Dump in 2017

The New Year is a time to clean out your home, your life and your portfolio in order to get rid of the bad stuff. That means it is a time to dump investments that might lose money during the coming year.

Disturbingly there are a few categories of investments that seem poised for disastrous losses in 2017. These include some historically reliable money makers and undoubtedly some “growth” instruments that might be in your 401K or portfolio right now.

Based on my analysis of the markets here are a few investments that you should seriously consider dumping or avoiding in 2017. They should also be seriously considered if you were looking for something to short or bet against in the market in 2017.

  • Gold, gold futures and gold-based ETFs. The precious metal went on a roller-coaster ride in 2016 rising to a high of $1,366.54 an ounce on July 7, but falling to a low of $1,128.90 on December 20, 2016. That is likely to be reported in 2017 with many investors taking big losses. Sinking currency prices in India and China are likely to drive gold prices by reducing the buying power of gold investors in major markets.

  • Gold-mining stocks. Several miners took an even bigger hit than gold investors in 2016. On September 30, 2016. Barrick Gold (NYSE: ABX) shares had a return on equity of -30.70% and Goldcorp (NYSE: GG) stock came with a return on equity of -30.49%. Goldcorp also came with a net income of -$4.21 billion and a diluted earnings per share number of -5.09. Goldcorp also experienced a major drop in revenues they fell from $4.138 billion in September 2015 to $3.685 billion in September 2016 expect to see a repeat of this in 2017.

  • Asian currencies. China’s currency the yuan lost 6.6% of its value in 2016, slumping to its lowest level since 1994. The Taiwan dollar also had bad year falling by 3.5%. Other currencies are expected to feel the pain with the rupee falling by 2.5% and, the Philippine peso by 3% in the coming year. Since the Philippine peso fell by 5.3% last year that would be an 8.3% drop in value in two years.

  • European currencies. 2016 saw a steady stream of pound falling headlines with news about Brexit driving the sterling lower. The latest round of decline is based on fears Britain will lose access to Europe’s single market. The Euro also kept dropping particularly after the failure of the government referendum in Italy. There are fears the Euro might sink to 80¢ USD in 2017, analysts at RBC Capital Markets in Sydney told The Guardian. Were that to occur we might see an 85¢ or 90¢ Euro and pond, two events that would trigger inflation in Europe.


  • Chinese stocks. The strong dollar and the weak yuan will mean lower profits for Chinese industry. The turmoil in the Chinese financial markets that characterized 2015 seems to be returning with massive outflows of currencies. Fears of real estate, manufacturing and lending bubbles bursting in the People’s Republic; and hysteria about U.S. President-elect Trump, are driving the stampede to the exit. Don’t expect any recovery in Chinese markets until 2018 or 2019.

  • Australian real estate. The subcontinent seems to be in the midst of a perennial housing bubble that seems to be burst proof. That might change this year particularly if an economic slowdown in China and weak yuan lower demand for Australian minerals leading to recession. This also means that it is a pretty good idea to stay away from Australian stocks as well. A related problem for Australia will be the lower buying power of Chinese investors driven by the weak yuan. Chinese investors have been driving Australia’s real estate bubble.


  • Oil stocks. One major US oil producer Chevron (NYSE: CVX) is already operating at a loss reporting a negative income of -$1.5 billion on September 30, 2016. As recently as September 30, 2015, Chevron reported a net income of $8.646 billion. Another Exxon Mobil (NYSE: XOM) is rapidly heading that way. Exxon-Mobil reported a net income of $19.94 billion in September 2015 and $8.94 billion in September 2016. The truly frightening thing is those are the strongest companies in the business. British Petroleum (OTC: BPAQF) reported net income of -$3.689 billion in September and a stock price of $6.15 a share on January 10, 2017. Apache (NYSE: APA) a major American oil and gas producer reported a net income of -$18.12 billion on September 30, 2016. Worse is yet to come when these companies begin earnings reports for 2017. A likely happening is Exxon Mobil reporting a negative income.

  • Department store stocks. Shares of JC Penney (NYSE: JCP) one of the strongest operators in the sector were trading at $7 on January 10, 2017, after reports of lousy holiday sales. Some of its competitors were overpriced Kohl’s (NYSE: KSS) was trading at $41.22 a share even it too was afflicted by a terrible holiday season. Another department store Dillard’s (NYSE: DDS) saw its revenue drop for the five straight quarters; from July 2015 to October 2016, yet it was still trading at $55.99 a share on January 10, 2017.



These are just a few of the investments that might tank in 2017. Staying away from them might help you keep your money, or lose it if these predictions are wrong.