Source: Morningstar Direct 2016. US Stock Market represented by: S&P 500 Index. Indexes are unmanaged baskets of securities that are not available for direct investment by investors. Index performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results. All investments involve risk, including loss of principal. http://www.cnbc.com/2016/01/07/soros-its-the-2008-crisis-all-over-again.html, http://www.cnbc.com/2016/01/15/prepare-for-stocks-to-fall-another-10-larry-fink.html
Every quarter has its fair share of alarmist media headlines. Yet Q1 2016 may have taken the cake with a pronouncement from the Royal Bank of Scotland on February 11 urging investors to “Sell Everything!” It also happens that February 11 was the low point for the quarter and the market has rallied by double digits since that day.
The stock market experience was similar around the globe, with many markets falling by more than 10%. Yet, we’ve historically experienced a 10% decline at some point during every calendar year. So this 10% decline on the S&P was notable only because it came so rapidly at the start of the year. Once it recovered, sentiment followed, and by the end of the quarter we had pundits predicting all time market highs were right around the corner.
Q1 2016 was a textbook example of how NOT to make money in investing. Short-term predictions about the stock market are often worth less than the paper they’re printed on.
One prediction that was spot on came on January 1 from the Associated Press: Expect less and buy antacid. Looking backward, that was apt advice for daily market spectators; however, if you took a 3-month vacation and didn’t check your balance, you’d return thinking the first quarter was normal — no antacid needed.
In this 12-minute Making Sense of Markets Q1 presentation, Loring Ward’s Portfolio Strategy Team discusses what happened last quarter, shares timely and timeless insights on markets and reminds us of the importance of a long-term perspective.
Click here to watch Making Sense of Markets Q1 2016
All investments involve risk, including the loss of principal and cannot be guaranteed against loss by a bank, custodian, or any other financial institution.