2016 Stock Investments to Slow Down
If investing wasn’t always a bore, it is now and it is expected to remain that way for the rest of the year.
Mutual fund managers, analysts and others are all letting investors know that 2016 is a year where lower returns on investments from stocks and bonds are to be expected. Also predicted are severe price swings. Investors were freaked out in August when there was a 10% drop, but don’t be fooled into thinking that it won’t be happening again rather sooner than you might think.
The good news in all of this is that there are only a few economists who are looking for there to be a recession this year. For this reason, investments and stocks can avoid a slide that is sustained and keep grinding away to get higher. 2016 is predicted to look like 2015 with stock prices gyrating yet staying in track to end near to where they originally began…unlike the bull market in 2013 when there was a 32% surge seen with the Standard & Poor’s 500 Index.
Be realistic and realize that runs like the one from 2013 are just not going to happen this year.
There is a rather long list of reasons for this. The economic growth that we are seeing spanning the globe is still amazingly weak. The growth in earnings for those large US companies has ground to a halt. When you measure the prices of stocks against the current corporate earnings, and this is not like it was in the early years of that bull market. Also, the Federal Reserve just lifted the rates for short term interest for the first time in almost an entire decade. Aside from making all sorts of markets more unsteady, those higher rates can also have a negative impact on the prices of the bonds that are already in the portfolios of mutual funds and investors. On the other hand, higher rates of interest will mean that investors in bonds will be rewarded eventually with income that is higher.
In other words, learn to curb your expectations for the coming year.