It has not been a fun start to 2016. In the last 5 weeks, the stock market is down 9.25% as of this afternoon. We are almost back to where we were last August when the market fell about 1800 points in ten days. This isn’t good, but it’s also not the full picture as ‘the market’ that we generally focus on is the Dow Jones Industrial Average, comprised of 30 ‘significant’ U.S. stocks. They certainly are a leading indicator what to expect in our near future, but they don’t tell the whole picture. For example:
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In the last 3 weeks, the price of oil has risen by nearly 15%.
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Small cap stocks are down, 5% worse than large cap stocks. This sounds like bad news, but the good part about it is that diversification is real. Smaller stocks carry greater risk, and thus their returns (or losses) should be a magnification of what large company stocks are doing.
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Gold is up 13%.
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The 10-year US Treasury is up 5% year to date.
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Bonds are up nearly 2% year to date.
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