Happy New Year, friends.
It has not exactly been a friendly start to the new year for stocks.
Across the first 10 trading days of the year, the major indices have done as follows:
Dow Jones Index dropped from 17,425 to 15,988, a decline of over 8.2%
Standard & Poor Index dropped from 2,044 to 1,880, a decline of over 8.0%
The Nasdaq dropped from 5,007 to 4,488, a decline of over almost 10.4%
Yes, it has been a really tough start to 2016 for stockholders. In fact, it is the worst start to a year ever. See this article.
I’ll share a couple of additional interesting articles concerning the backdrop for this market decline. Go here for an article from yesterday that discusses key factors driving market fears, factors including oil, China, the dollar, and credit market and Fed uncertainties.
Go here for an article from January 7, 2016, that discusses how the average stock is already in a bear market (note, this article is before the 2nd difficult down week of January, so indices were actually a good deal higher the morning of Thursday, January 7, when the article was recorded).
I’ve shared in prior blog posts how that a large number of companies failed to participate significantly in the so-called bull market of recent years. The last article highlights this fact. An acronym for four stocks, FANG, stands out today to refer the strong roles Facebook, Amazon, Netflix, and Google have played in recent times in driving the market ahead while at the same time backbone commodity companies working in oil and gas, gold and silver and copper, etc., were literally decimated.
There’s a lot of indiscriminate selling going on of late, probably exacerbated by investors receiving margin calls. There are some deep value stocks coming from this sell-off and values may even become more pronounced depending on the magnitude of the overall decline.
While the theme of “Choose Stocks Wisely” is always relevant, it is of particular value in times where fear may not discriminate between the value of healthy equity vs. a troubled financial position. Unusual opportunities can present themselves.
May God bless.
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