Market Update 2/11/2016

The volatility in the financial markets is continuing. The most recent catalysts are –  accelerating concerns about global growth fueled by oil’s continued decline, credit concerns with European banks, and the Japan Central bank instituting negative interest rates.  Add in some additional geo-political news like North Korea launching a “satellite” and the Zika virus spreading,  and you get a panic in the markets.

Here is an interesting thought from Gavial Organization – “when markets go up for no adequate reason that behavior is usually described as irrational herd instinct but when markets collapse for no good reason everyone assumes that investors must know what they are doing and have discovered some hidden horror even though no one can describe what that is”

I continue to feel that the fundamental economic picture, especially in the US is not dire.  Having said that, the market deals in its own reality which right now is extremely pessimistic.  As of 12:00 EST 2/11/16, the S&P 500 (my preferred measure of the equity markets) has breached my support target of 1,850 – 1,867 but has maintained major support in the 1812 – 1820 range. As such I am now making adjustments to portfolios to lower the amount of equities.  Please note: the current situation still does not call for selling all equities but rather reducing exposure.  The reason being that markets can turn on a dime, from up to down as we are currently experiencing, and from down to up.  The chart below (courtesy of BlackRock) shows the best strategy for the long haul is to stay invested.

FEB_UPDATE

Although information herein has been obtained from sources deemed reliable, its accuracy and completeness are not asserted. All opinions and estimates included in this report constitute the judgment of the financial advisor as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Investing involves risk and you may incur a profit or a loss. Diversification does not ensure a profit or ensure against a loss. There is no assurance that any investment strategy will be successful.  Past performance is no assurance of future results.

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