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2015: A Recap
As 2015 came and went I would sum it up with: All sound and fury signifying nothing.  The major averages finished virtually flat for the year. Ironically for all the day to day volatility, the indexes overall volatility was less than average: The peak to trough decline for the year was 12.4% versus an average annual decline since 1975 of 14%. So after more than tripling in six years from crisis lows of 2009, the equity market essentially rested.  
China slowed (which is not news as all emerging economies slow from their initial take off phase). It’s also important to note that less than one percent of US exports go to China. You would have thought, however, that during that 12.4% market correction the world was coming to an end. The Federal Reserve finally raised interest rates a quarter of a point…..from zero. This had virtually no effect on capital throughout the world, but the media’s hysteria for months prior would have you think you should jump in a bunker.
Emerging markets and commodities were hammered as the dollar continued to rise. The price of oil continued to make new lows. While oil’s drop hurts the beneficiaries of the oil boom, it is one of the greatest middle class tax cuts in American history and serves as a huge net positive for all of us. Junk bonds and those invested in them (especially those in the energy space) suffered severe losses which reminds us that “hero” investing and chasing the falling knife is extremely dangerous and simply doesn’t work. The chase for yield is always more volatile and more risky than it seems and offers only the illusion of safety.
2016: Looking Ahead
Well if the first week of the year is any indication, we’re not yet done with the volatility. This will only encourage the media frenzy.  In my opinion, the best strategic move for investors going into ’16 is to shut off your TV and focus on what matters most. There will be countless articles about the uncertainty of the election and the impacts on the market. If you want to see the impact of elections on markets we can review the Andex chart in my office (or let us and we’ll send you a copy) which shows the impact presidents on the markets over an investors lifetime (Hint- it’s zero).
It’s absolutely critical during these times to practice patience, discipline and keep perspective on your life goals, not the day to day. The market works in fits and starts, but the more trading, reading and analyzing investors do the worse their real-life returns become. My advice for the new year: Let’s set a date for our annual review. We’ll get a handle on the big picture, review your life goals, identify risks and update your current allocation.  We’ll review what’s most important to you and get a solid plan heading into ’16 and beyond- Now let’s get to it.
Here’s to a happy new year and a great ’16,
Gavin Gleason, President
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The Gleason Group 9418 Norton Commons Blvd, Suite 100 Prospect, KY 40059

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