“She moves in mysterious ways. It’s alright, it’s alright.” U2
When your statements arrive this week you may be in for some sticker shock. January was the worst month for the DOW in more than 5 years. If you feel a little poorer, even if it’s only for one month…welcome to “Club 2016”. The DOW Jones Industrials fell 7.8% in January. The S&P 500 Index faired a bit better by dropping only 5.1%. The NASDAQ was lower in January by 7.9% on weakness from Apple Computer and inconsistency from the FANG group of stocks: Facebook, Amazon, Netflix and Google. Crude oil prices, overseas troubles and an interest rate hike have all added to January’s tumultuous downturn.
On the positive side, investors can earn more in dividends today by purchasing the S&P 500 than by buying a 10 year Treasury note. Currently, the S&P 500 average dividend is 2.2%. Locking money up in a 10-year Treasury will yield 1.9%. It sure doesn’t look like the Fed board will be raising interest rates any time soon…especially after the market folded immediately after their last raise. Despite reports of slowing economies here and abroad, January ended on a very high note. The DOW soared 396 points on the last trading day of the month. Mysterious market moves indeed.
The music world has experienced its share of losses in 2016: Natalie Cole, David Bowie, Glenn Frey of the Eagles and Paul Kantner of the Jefferson Airplane. Our glasses should be raised in honor of your great songs and how they moved us. RIP.
This is a very brief report to give you a simple heads up and to offer some viewpoints. The bull market is entering its 81st month. That’s a really long time to keep going up, so we should expect some wind and rain to hit most investments. In the long run, investors are wise to stay invested for 3 reasons: 1) Bulls average gains of 126% over 49 months; bears lose an average of 28% over 9 months; 2) Selling at a bottom or paying taxes to exit can be expensive; and 3) Being out of investments during strong upward moves are costly.
Please get in touch if you need to change your risk, want some reassurance, or need additional perspective.
Today’s the day,
Mitch Fisher