What a start to 2016! This past month has been an interesting one in the market, to say the least. After a disappointing 2015, the 2016 began with a sharp downward turn in the stock market. The financial headlines, designed to get our attention, are encouraging fear. We have experienced the first correction in years, and certain sectors are in a bear market, down more than 20%.
Now let’s take a closer look at the US economy. There is room for optimism here. Businesses are hiring. Headlines from financial websites: December Jobs Report Crushes Expectations (from FoxBusiness.com) and The American Labor Market is on Fire (from BusinessInsider.com). Economist Brian Wesbury estimates GDP will come in at about 2% for 2015, not great growth but “plow horse” growth. In 2015, US auto makers sold more cars than ever before. Consumer confidence is improving.
As we begin 2016, then, we are reminded that while there is reason for concern, there is also reason for optimism. We don’t know what this specific year will bring in terms of financial results, but we do know that over time, having a portion of our resources invested in equities pays off. As our investment team looks forward, we believe the US economy will continue to grow. We will keep our home country bias, investing predominantly in the US markets, but also commit resources to the rest of the world, knowing that there is great potential for growth outside of our borders.
There will be economic surprises ahead of us, both on the upside and the downside. Count on it, for we have been promised trouble in this world. We also are called to move forward without fear. At CTC, you can rely on us to keep our eyes wide open, study the best research and data available, and to make prudent, long-term decisions in your portfolios. That is our commitment to you as we move into 2016.