As January Goes… So Goes The Year?


January is now behind us and it couldn’t have happened fast enough if you are an investor.  With the Dow Jones industrial Average down 3.7% and the S&P 500 off 3.1%, it’s certainly not the best way to start a new year.  To put in perspective, last January the S&P was down 3.46% but did turn around nicely in February when the average was up 4.57%.  Talk about roller coaster rides.

What will happen this month and for the rest of the year is anybody’s guess.  According to an article by Erin Arvedlund in last Monday’s Philadelphia Inquirer (read article here), “oil-price drops may spur future market rebound”, pointing out similar times when oil prices sunk.  We’ll see.

The article also references Chuck Widger, founder and chairman of the $17 billion Brinker Capital who is quoted as saying “Active managers do better in volatile markets, and we’re entering a period like that because QE is over and the Fed will likely increase rates.”

I’ve read numerous articles and columns recently saying basically the same thing: index funds do better in up-markets but actively managed funds shine in higher volatility periods.  Again… we shall see.

As for looking ahead, there are many reasons why this could be a bumpy year in the market… but then again, maybe investors will just climb “the wall of worry” and like magic, the markets will go up.

We all love it when the markets go up, but we also know the markets have their dog days.  As I am always reminding our clients, if the ups and downs of the market, the roller coaster ride as I like to call it, is keeping you awake at night, you probably have too much money at risk to the market.  If that’s you, give me a call and let’s review your plan.

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