Name: This Is Your Mid-Year Market Recap
Uploaded: 2016-05-19
Duration: 4 min 8 s
Description: What you need to know before making your next investment.

[ MUSIC ] So, if you remember, the market started the year in free fall. People were freaking out. The Dow had its worst start to a year in any year since they started keeping records, since 1897. And then, just when people started to say that's it, we're going into a bear market, the bull rally is over The market came screaming back at a huge rally through the second half of February, March, and into April. Since then, its' kind of gone sideways, a little bit down, and isn't that far from where we started the year which really as a whole lot like what happened all of 2015. So really now, you've had a year and a half Of a market that's had big moves up and big moves down, but hasn't really gone anywhere. Some of the big trends we've seen so far this year is that Corporations are still buying back a lot of stock. Stock buybacks are up 20 %, in the first quarter from where they were a year ago, and already at record levels last year. We've also had a lot of mergers that got canceled, either because of regulatory issues, or shareholder opposition. Deals like Pfizer- Allergan, Baker Hughes and Halliburton, Office Depot and Staples. All these big deals got axed. So the first quarter earnings were the weakest since the financial crisis, down about 6 % for the S & P. Five hundred from a year ago. But, that wasn't as bad as people expected starting the year. So it's definitely one of those expectation games being played. But, the bottom line is the earnings trend for the S & P 500 has been going down for several quarters now. That's got people worried about valuations. Speak about valuations, the valuation of a lot once hot startups took major beatings in the first part of this year. Viewed companies like Theranos and Zenefits Where there are now questions about whether these companies are going to be able to continue, and that's long before they ever go public. And you have public companies like Valeant Pharmaceuticals which has major upheaval, huge drop in the stock price, it's definitely the kind of things that shakes investors confidence. There's been a lot of talk about the Feds so far this year just like there was all of last year. At the start of the year, there were a lot of people thinking that they would be very aggressive at raising rates. And then, some of the economic numbers starting coming in weaker than expected and the market's fall at the start of the year got people rethinking that. And then the Fed was off the table for several meetings. And now, as we head into the second half of the year, there's already chatter again about how many rate hikes we're gonna see from the Fed. For the rest of 2016. Again, a very simple conversation as we saw on 2015. One of the few constants this year has been the strength in commodities. Again, at the start of the year everybody hated commodities, they were total reformers last year but oil has been on a big rally and gold has been very strong all year long. Gold is up about 20 % so far in 2016. I don't think it's about people's concerns about inflation, which is what you typically hear. I think it's a big concern about negative interest rates, as we talked about earlier this year. When you have negative interest rates in big parts of the global economy, that means that investors effectively are paying the bank to hold on to their money. And if you have to pay the bank to hold on to your money, why wouldn't you rather invest it in something that might earn return. Like gold and gold has been a very strong performer. Here's my rule of thumb when it comes to gold. Gold should be no more than 10 % of your portfolio. If it's gotten more than that after this recent rally I suggest that you sell some of it. That's because if there's one thing we've learned in this market so far it's that nothing lasts forever. [ INAUDIBLE ] [ MUSIC ] And it's hard to hold a candle. [ MUSIC ] In the cold November rain. And a lot of part of May, it felt like it was November. The bottom line is there's no halftime on Wall Street. Unlike professional investors, you and I don't get graded on how we do in a given quarter, or two quarters, or a year. And that's the good news. The only time that should matter to you is your own time For us. So take any kind of update you see about the mid- year, or annual results, with a grain of salt. Including this one. Now having said that, it is important to periodically check in and see how your portfolio is doing. And if the second half of the year, or the mid- year gives you a chance to do that, that's great. Make sure that your plan is still intact. Make sure that the stocks that you bought are still working for the reasons that you bought them for. And you might even find out things are doing even better than you thought they were doing. And that's a great problem to have. And then, as Axl Rose might say, all you need is just a little patience. [ MUSIC ]

What you need to know before making your next investment.