“People should watch the extremes. On those big down days, hold your nose and buy.” Donald Selkin
The stock market made history this week. It was the worst start of a year for the DOW and the S&P 500 ever! In a precipitous free fall to begin 2016, courtesy of the Chinese economic meltdown, these major indices declined more than 10%. Will this opening salvo be the end to a bull market that has lasted 80 months?
If you went to bed on New Year’s 2015 and woke up 12 months later, you might think that not much happened in the financial world. Frightened by terrorist events, hammered by the collapse of oil prices, relieved by an overdue interest rate increase, and encouraged by corporate earnings…volatility poked its head out often last year. However, the final 2015 numbers were placid: The S&P 500 gained 1.3%, the DOW inched 0.2% higher, and the Russell 2000 index of small companies lost 4.41% last year. The NASDAQ was the overall champion with a rise of 6.9% in 2015.[1] So far, this year looks to be a very different story.
Mark Zuckerberg spread around his amazing good fortune last year. As the CEO of Facebook watched his stock grow from $75 to $105 per share last year, Mark and his wife Priscilla Chan made a charitable donation of $45 billion. The incredible gift is more than the typical Rockefeller-Gates-Buffet foundation pledge to help the world and to reduce taxes. The Chan Zuckerberg Initiative will own stakes in businesses that include education and health care in order to “harness the profit motive on behalf of their philanthropic goals”.[2] This is truly a new approach to charitable giving from one of the world’s greatest innovators.
Since the market handed out its very “worst” last week, here are a few of the “best”: The Golden Globe’s last night awarded their trophies for best actress to Lady Gaga, Brie Larson, Jennifer Lawrence, Taraji Henson, and Kate Winslet. For best actor, the winners were Christian Slater, Leonardo DiCaprio, Matt Damon, Jon Hamm and Sylvester Stallone. The “Revenant”, “Inside Out” and “The Martian” won for best movies. “Mr. Robot” and “Mozart in the Jungle” were named best TV shows.
The “best” in the NFL this year are the eight remaining playoff teams: the Steelers, Patriots, Broncos, Packers, Panthers, Chiefs, Cardinals and Seahawks. According to You Tube, the 5 best chefs in the world are Alain Ducase (Monaco), Thomas Keller (USA), Pierre Gagnaire (France), Joan Roca (Spain), and Paul Bocuse (France). Many foodies would have Ina Garten and Giada De Laurentis on their best chef list. Rolling Stone magazine names the top five guitarists of all-time as: Jimi Hendrix, Eric Clapton, Jimmy Page, Keith Richards, and Jeff Beck.
What do I think will be the best investments in 2016? They are just ahead in this report.
Pacific Sun Financial completed many of our objectives and projects in 2015. We received over 30 introductions from you last year and welcomed many of your friends and family to our firm. Thank you. Our new assets under management grew 128% more than projected. We upgraded our technology, updated our website, and improved our systems and account management with Schwab. We reviewed and lowered some of our fees to guard against unnecessary expenses and remain competitive. We have 24 projects outlined for 2016 that are geared to providing more value and better service for you. I welcome your suggestions, too.
With all due respect to market surveys, our view of meetings with you has not changed much. According to the experts and surveyors, the 21st century has ushered in a strong shift in client expectations for financial services. The Internet has created a new client paradigm of auto investing, do-it-yourself management and Googling for information. We have incorporated many of these important patterns into the fabric of our services. We use Skype and Facetime regularly. We offer Robo-investing through Schwab’s Intelligent Portfolios. Our website directs you to online sources of financial information and a Daily Market Notes. You can view and transact in your accounts at any time of the day or night. All of these up-to-date, self managing services are helpful…but nothing takes the place of a face-to-face meeting with your advisor. You can walk into a lab and take a blood test, obtain your results on line, and do your own health physical exam. You can watch a video of how to tune up your car, too. Isn’t it really much better all around to see your doctor or your mechanic? Despite the do-it yourself trend, let’s be sure to have at least one or two check-ups this year.
From my perspective, the best investments in 2016 will likely be in the blue chips, technology, medical and biotechnology sectors. Just because China’s economy has the flu and sneezed on the USA doesn’t mean that we’re in for a bear market…even though we are long overdue for one. There are significant risks in the bonds, precious metals, and overseas. In my opinion, you still have more chance of making money by purchasing solid companies that offer 2%-5% dividends and will likely outlive us. Although you might recall the tech-wreck in 2000, the quantum leaps provided in this sector have great profit potential. Simply think about how reliant we are on an internet connection these days. Finally, people will continue to need cures for diseases, better drugs, new body parts and the enormous benefits of mapping the human genome.
If you’re in it for the long run, it’s time to embrace the fear in the markets and add to your investments.
Today’s the day,
Mitch Fisher
Pacific Sun Financial Corp; 95 Argonaut, Suite 105, Aliso Viejo, CA. 92656 Phone: (949) 716-8646 Fax: (949) 716-8645 Website: www.pacsunfinancial.com
National Asset Management, Inc. (NAM) is a Registered Investment Advisor with the SEC. NAM provides fundamental investment management services. The views expressed contain certain forward-looking statements. NAM believes these forward-looking statements to be reasonable, although they are forecasts and actual results may be meaningfully different. Actual events may cause adjustments in portfolio management strategies. This material represents an assessment of the market at a particular time and is not a guarantee of future results. This information should not be relied upon as research or investment advice regarding any security. One cannot directly invest in an index. Donald M. Selkin is the chief market strategist at National Securities. Index performance returns do not reflect any management fees, transaction cost or expenses. Indices are unmanaged. S&P 500 Index is an unmanaged index of 500 common stocks chosen to reflect the industries in the US economy. DOW Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange. The NASDAQ is a global electronic marketplace for securities as well as the benchmark for U.S. technology and biotechnology stocks. The Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index. Investment Advisory Services offered through National Asset Management, Inc SEC Registered Advisor. NAM or Pacific Sun Financial does not offer any legal or tax advice. One should consider consulting with a legal or tax professional before implementing investment strategies.
[1] JP Morgan Asset Management 1/4/16 [2] Wall Street Journal 12/3/15