The Halfway Point

The Halfway Point of 2016

Some views of the world markets and economy after the forst six months of 2016.

The Halfway Point

We are now one half way through 2016.  Wow.  Interesting – HUGH differences in various asset classes and the HUGE range of highs to lows over the past ½ year. 

This can be a case for diversification in that the big losses in some classes could have been offset by big gains in others. 

OR, it can be a case for asset class management – bias away from classes where gains don’t appear to be probable or where the traders are throwing bets.  That’s what we have been doing.  We have not been fully invested, thus holding more cash than when the market was stepping upward in 2012 – 2014. 

The volatility was HUGE compared to the actual gains for the stock market.  When the market makes 2% but has a range of 15%, something clearly out of control.   When Oil goes down 3% but has a range of 28% . . . .  When the dollar moves 3% with a range of 7% . . . .  this is a time to stay conservative and patient.  This was a difficult period for investors who are most focused on growing long-term capital.  Clearly the traders were active, but while we have heard of some hedge funds and traders who have picked well, we have heard far more stories of large losses and even funds going out of business. 

It is easy to look backwards and say “should’a” “could’a”.  The analysts and investment firms that we watch have stayed on the sidelines in cash and less volatile assets as we have. 

What we know from looking at previous periods where the market was flat and volatile for more than a year is that these periods do come to an end and a new trend emerges.  What is NOT clear is whether that trend is up or down.  We are optimistic, as the US economy is not leaning into recession.  On the other hand, there are plenty of factors that are raising yellow warning flags.  We monitor the markets across all asset classes and across the globe daily.  Our risk processes are in place to manage if the markets turn south, and we continually update our “buy” list.

The hiccup in 2000 came from excess speculation in companies with eyeballs but no earnings (; the hiccup in 2008 came from borrowers with mortgages but no ability to pay; the next hiccup will come from somewhere else.   We each can speculate, as do the talking heads on CNBC and Bloomberg every day, about the next problem, but history shows that rarely does anyone really guess the cause and the timing well.    

Winners so far this year:

  • Bonds
  • Gold
  • REITs
  • Dividend Stocks


Stock market in general


  • Europe
  • Japan
  • China
  • x-US stocks in general
  • Oil
  • Dollar


  • Gold 28%
  • Stocks 2%
  • Oil -3%
  • Japan -12%


June 2016

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