Broker Check

Key Takeaways from 2016

| January 06, 2017
Share |

2016 to 2017Happy New Year, and welcome to 2017! I hope you had a lovely holiday season with your family.

Wow! 2016 is in the books, and what a year it was (for the markets, for global events, and for the U.S.). Being that this time of year is a great one for reflection, I wanted to share a few key takeaways I had (reinforced) for me last year.

The popular saying we have in the industry "so goes January, so goes the year" turns out to be false (like many popular Wall Street sayings). If you think back to January of 2016, the S&P500 index had its worst start to a year for U.S. stocks ever. Worst EVER. By the end of January, the year-to-date returns for the S&P500 were negative 10.5%, and by February 11th, the S&P500 was down almost 12% YTD. The four key areas of concern back in the 1st quarter were: China's slowing economy, oil falling off a cliff, a U.S recession scare, and a real earnings recession of US S&P500 companies. There were many reasons to be bearish (negative) in Q1 of 2016. Now, we know how 2016 ended: with the S&P500 positive 10.8% (not including dividends). So goes January, so does NOT go the year (necessarily).

Everyone's crystal ball broke in 2016. If someone would have told you at the beginning of the year that "Brexit" (the U.K. citizens' vote to leave the European Union) was going to occur and Donald J. Trump was going to be elected the next president of the United States of America AND the U.S. stock market was going to rise over 10%, you would have looked at them as if they had three heads. But guess what?! All of that did happen, and the market rallied. Takeaway: the market is unpredictable. It's one of the reason I love what I do. We "experts" can read and analyze and predict until we are red in the face, but [wait for it], we don't actually know exactly what will end up happening and how the market will react.

....except apparently the Chinese zodiac's crystal ball. As Ryan Detrick ( https://twitter.com/RyanDetrick), LPL Financial’s Senior Market Strategist, concluded: "I also learned not to doubt the Chinese zodiac, as equities gained during the year of the Monkey in 2016, just as they have every time since WWII."

So this brings me to the biggest and most important takeaway that is timeless: K.I.S.S. (Keep It Simple Silly). Develop a diversified and appropriate asset-allocated portfolio (for your age, financial position, goals, tax bracket, and time horizon), rebalance at least annually, don't try to time the market or predict what is going to happen (unless you predicted all the events and subsequent market reaction perfectly in 2016); and whatever you do, do not freak out and make emotional decisions when there is market volatility. And if you can’t do all of this on your own (especially the not freaking out part), consider hiring a trusted financial advisor to assist you.

If you have had enough of trying to predict market events on your own, Contact Us, and we would be happy to help.

Cheers to an awesome and exciting 2017!


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Diversification and Asset allocation does not ensure a profit or protect against a loss.

Share |