Oil, slip slidin' away

Jan 20, 2016 | Wealth Management

The markets in 2016 continue to be ruled by volatility and guided by a two-headed monster:

  1. China-Disappointing manufacturing data continues to call into question the overall health of the global economy.
  2. Oil-Crude oil prices continue to fall on supply and demand concerns.

Both of these along with some disappointing December retail sales numbers domestically have led to the S&P 500 being down just over 9% since the beginning of the year.  Some media pundits like to refer to this as a “healthy correction” ,  which is a term I feel needs to be removed from our lexicon.   However, in the context of history, you can conclude that corrections like this may be considered “normal” throughout any market cycle. The S&P 500 has averaged 3 corrections per year of 5% or more since 1927, and since 1957, has averaged a correction of 10% or more every 1.5 years.  Not that these data lessen the pain of the current correction, but they point out that corrections are part of being a long-term investor. 

We want to remind everyone that investing cannot be ruled by panic and emotion.   While data do not suggest the US will enter into a recession, slower growth is certainly in the offing and it remains essential to be well diversified and keep a long-term perspective.  The US markets are consumer driven and we believe the persistent low gas prices may provide some positive momentum going forward. We’ll also have to keep a close eye on corporate earnings and see if they can help change the mood on Wall Street.  So, as you sit by the fire thinking about the next episode of Downton Abbey (I know you are!), relax, and take this volatility as a reminder to review your overall financial plan.

 

Jeff Schriefer
Vice-President
Senior Wealth Advisor
Wealth Management
jschriefer@bankofthebluegrass.com
859-233-8929 Office
859-252-0304 Fax
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