It has been a tough start to 2016 – the worst ever as headlines have reported. The selloff in this past week has been sharp and unrelenting. We are off almost 9% from the market’s recent highs. Even the most seasoned investors find these types of corrections upsetting and daunting.
The last time we sent an email like this one was late August when markets were down 10-15% in a short period of time. As in August, one of the catalysts for this correction has to do with China, whose young and illiquid stock market is being tested daily by rampant selling and reactionary government regulation. The potential slowdown of global economic growth and the recent “bomb” test by North Korea has added to investor angst.
In addition, the price of oil has undergone a shock- but not in the way many prognosticators had imagined. The price of oil has tumbled and remained lower for longer than ever expected. Surprises like this, though welcome for us as consumers, have other implications that are negative which we will discuss in our quarterly commentary forthcoming later this month. As of now, we have not retested the stock market lows of August and September, although it would not be unusual to do so.
As we have stated in the past, long term financial plans and thoughtful investment objectives shouldn’t be abandoned when markets behave irrationally. Markets are made up of millions of people and the range of their anxieties and passions rule in the short term. Those of us who stay the course and are disciplined, or those who buy into and through the fray, are often those most rewarded over the long term.
We appreciate your patience and resilience during this time and are available to talk, meet, or review your specific situation or that of someone close to you as needed.
We will get through this together.