We know markets are tough, but what areas are doing better than others?

The biggest question on clients’ minds – Does the rough start for the market this year foreshadow the coming of a bigger bear market? Looking at a graph showing some of the worst 10-day starts to a year remind us positive returns could be in store for 2016.

In the first four trading days of 2016, U.S. stock market indexes have declined approximately -5%, the worst four day start to a year for the Dow and S&P 500 in history, according to FactSet data going back to 1897.  The catalysts for the decline seem like an almost exact replay of last August’s correction – news of slowing economic growth in China, China devaluing their currency, and the Chinese government interfering with free operation of their stock market. Let’s look at each piece to discuss what is happening:

As this note is being written on the last day of the year, the Dow is down over 100 points, capping off a year of flat to negative returns for major stock indexes in 2015. Looking at how things stand in December, here are a few observations:

Yesterday the Federal Reserve increased the Fed Funds rate by 0.25%, effectively ending a 7 year period of zero interest rates. The move in rates was widely expected, but the main event was what Fed Chair Janet Yellen said about the future…

This week, three charts particularly caught the attention of The Joseph Group’s investment committee as we discussed what is happening with markets and what is likely to happen going forward.

This past week, all eyes were on Congress and the debt ceiling negotiations. A budget deal was struck, but there were a couple important provisions of that bill not being talked about which impact Social Security claiming options. Specifically, two key strategies were targeted which are now being phased out.

“If you were to close your eyes and not look at the market for the next five years, where do you think you could make the most money?” Our answer to the question:

First the bad news. The 3rd quarter of 2015 was the worst quarter for the financial markets in four years. From July through September, most major stock market indexes experienced a correction of 6% to 10%, with areas such as energy, health care, and emerging market stocks getting hit even harder. With markets generally flat in the first half of the year, the correction in the 3rd quarter means virtually every index we look at for asset classes around the world is down 6% to 10% on a year-to-date basis.What’s the good news?

Fears of China’s slowing economy and the resulting correction it caused in late August has clearly rattled investors. Understandably, investors are asking, “what’s next?” Read about some of the key things we are looking at: