Market Outlook for 2016 | January 2016
Well, Happy 2016…I’m writing this in the middle of the month, and market-wise, things aren’t too happy. I was all set to write about New Year’s resolutions and reflect all sappy sweet over the people who have meant so much in my life, but the market noise that started the first week of January begs for some attention. Perhaps.
Firstly, let’s notice I said “noise”, not crash, not dire, not portending gloom and doom. It’s obviously not a good market if you’re selling, but it’s great if you’re buying. It’s not good for your balance sheet if you are Big Oil, but it’s great for your income statement if you’re in the trucking business. For all of us that are investors, not speculators or traders, it’s not the end of the world as we know it; it’s not even a noteworthy event. It’s just the normal behavior of equity markets. Some colleagues said it better:
“Remember, volatility is the price we pay for the returns we get in the equity markets.”
— Brian Wesbury, Chief Economist for First Trust Advisors, LP
“I’m bullish on Florida. Florida is again positioned to outpace the rest of the country in economic growth and job creation.”
— Dr. Tony Villamil, Founder and Principal of the Washington Economics Group, Inc.
“Fundamentals look good, but the market will be choppy.”
— Keith Albritton, CFP, CIMA, President & CEO of Allen & Company of Florida
Keith Albritton you probably know, but Mr. Wesbury and Dr. Villamil may be new to you. For a number of years they have spoken at the annual Economic Forecast Breakfast sponsored by Allen & Company and held each January at the Lakeland Center. If you missed the breakfast this year, check out the podcast(s) on our website (alleninvestments.com) to hear both Brian & Tony’s comments in their entirety, and come next December, remember to give your Allen & Company advisor a call to arrange for tickets to the 2017 breakfast!
The Economic Breakfast always restores my perspective and takes away many of those financial worries that I get when read or listen to the news. It does seem that our media in America today loves a crisis doesn’t it? This would be tolerable, if it weren’t for the seeming need to report one whether or not one exists!
In short, not the downturn in China, not the Federal Reserve actions, not the drop in oil prices or their eventual increase, not the claims and counter claims levied by candidates in an election year will lead to the destruction of our economy. They just don’t have the impact to do so.
I’ve been watching the economy in part or in whole for about thirty years now, and some themes consistently repeat. When markets are going up, overstated optimism and greed often drive them higher. When they are dropping, overstated pessimism and fear often drive them lower.
So here today is a resolution after all: In response to the negative economic noise there I offer a resolution for all of us: Let’s Stop Worrying! Let’s be investors and not speculators. Let’s dump the overstated emotional pull and always rely upon that financial plan based upon our goals and desires. Remember the basics: Investors think decades; speculators that think days and weeks and months. If you need the money in the next few years, it should be in cash or near-equivalents. Then rest easy.
When we rid ourselves of the worry, we can get on with the serious business of celebrating the life we have. Cheers & Happy New Year!