2016 4th Quarter Commentary –
THE U.S. STOCK MARKET HITS NEW HIGH!
Since the U.S. Presidential election, the Dow Jones Industrial Average has risen 1,803 points, from 17,959 on November 9th to 19,762 (on December 30th.) The 2016 Presidential election had the two most controversial candidates in memory. Americans had very strong feelings about which candidate was the best and which was the worst. Regardless of how you feel about the candidates, Mr. Trump won the election. Whether you agreed with Trump or disagreed with Trump, the important thing is to look at the things he is proposing:
2016 3rd Quarter Commentary
HOW IN THE WORLD DID WE GET THESE NEGATIVE INTEREST RATES?
One of the most common questions we have had over the last few years has been about negative interest rates and why they are bing imposed by central banks. As recently as June of this year, the Swedish National Bank, Swiss National Bank, Denmark National Bank, European Central Bank, and the Bank of Japan all had negative interest rates.
As most of you know, “Brexit” was the term used to describe Great Britain’s recent vote to withdraw from the European Union. All the polls were indicating that they would vote to stay in the E.U., so when the citizens of the United Kingdom voted to exit t
Since May of 2015 the U.S. Stock Market has experienced dramatic fluctuations. The Dow Jones Industrial Average, one of the primary indexes used to track the U.S. stock market, has literally bounced up and down like a yo-yo.
As you may recall our 3rd quarter 2015 Commentary was titled Two Down and Two to Go. This referred to four events we felt needed to happen as the economy strengthened. THE FIRST was a -10% correction in the Dow Jones Industrial Average. That happened in the spring and summer of 2015 when the Dow went from 18,312 to a low of 15,666.
Over the last few years circumstances have arisen which have allowed us to anticipate certain events with a much higher probability than normal. Following are four of these events, two of which have occurred and two we are still expecting.
Since the financial meltdown in 2008, the Federal Reserve has instituted 2 major policies. The first policy was to lower the Federal Funds interest rate to virtually zero and keep it there. The Fed has kept interest rates between 0% and 0.25% for the last six years. To keep interest rates this low for this long is unprecedented.
The 4th quarter of 2014 and the 1st quarter of 2015, when taken together, show a good example of the value of diversification. During October, November, and the first part of December the price of crude oil dropped precipitously. This unusually large drop in the price of oil effected many parts of the market. However, the three market sectors hit the hardest were:
In 2014 the media was filled with news about the Dow Jones Industrial Average setting record after record high. It closed on December 26th over 18,000 for the first time ever. However, on Jan 6, 2015 the Dow closed at 17,371 – a 667 point drop (-3.7 %) in 5 trading days.
As we publish this commentary on 10-15-2014, the DJIA stands at 16,141. On September 19th it stood at 17,279. So in the last month the Dow dropped 6.6%. Most of you are aware that we have been expecting this for some time.