As I sat at my desk originally writing this on Christmas Eve, the sun was shining and the temperature in Lansing was 58 degrees.  The unseasonably warm weather tempted me to believe that the cold was not coming.  Today, as I am ready to send it out, the cold is definitely back.

The same can be said of the especially accommodative policies of the Federal Reserve.  For years now, we have “enjoyed” the emergency-level of ultra low interest rates.  As the U.S. economy has improved, the Fed has finally moved the Federal Funds Rate up a fraction.  This, of course, was met with a mixture of relief and concern.  Although it was the worst kept secret in Washington, the reaction on Wall Street was still volatile. 

Market experts say that the price of oil and other commodities, however, are more to blame than the slight rise in rates.  With crude selling at less than $35 a barrel, oil prices have plummeted.  Saudi Arabia has the capacity and ability to keep oil cheap, driving out less capitalized companies and damaging rival oil producing states, such as Russia and Venezuela. 

So what will 2016 bring?  Following a strong stock market since the financial crisis (the Dow Jones Industrial Average slumped to a low of 6,547 in March of 2009; today it stands at 16,33), and a flat 2015, we are poised for a bit of some profit taking.  We may even see a correction, which is defined as a 10% drop from the highs.  The first trading week of the year looked ominous, as the U.S. markets followed the lead of the Chinese, which declined on slowing growth.

But here is the tough part; perhaps the best thing to do, is nothing at all. 

According to FactSet, if you invested $10,000 in the S&P 500 in 1994 and stayed invested for 20 years, your investment would have grown to $65,475.  If you were out of the market for the 10 best performing days in that 20-year period, your investment would have only grown to $32,676 – less than HALF of what you would have had by just staying invested. 

Now I'm not suggesting that you stick your head in the sand for 20 years, but the point is, it is very difficult to time the market.  If you pull out of the market and fail to get back in and miss those 10 days, your returns will likely be impacted.

In fact, smart investors use market downturns to their advantage, buying when prices are low.

Of course, a portfolio is not only stocks.  Make sure that your asset allocation is in line with your time horizon and your level of risk.  Here are some typical allocations:

Conservative     25% stocks; 75% bonds

Balanced            50% stocks; 50% bonds

Moderate           60% stocks; 40% bonds

Growth               75% stocks; 25% bonds

If you’d like to discuss or adjust your current allocation, give us a call to schedule a time to review your situation.

Regardless of what the stock market does in 2016, a good New Year’s resolution might be to save more for your retirement.  Some experts say that in order to replace 85% of your pre-retirement income, you will need to have saved 8 times your annual salary before you retire. 

That can seem daunting!  But the key is to save regularly – and a good goal is to increase your savings each year. 


If you have a retirement plan at work, that money goes in on a pre-tax basis.  IRAs and Roth IRAs can be good options, as well.

Need some help?  Let us know.  We have great software, reports, and strategies to help you accomplish your goals.

I hope you have a fantastic New Year.  We look forward to working with you in 2016!

All indices are unmanaged and investors cannot actually invest directly into an index.  Unlike investments, indices do not incur management fees, charges, or expenses.  Past performance does not guarantee future results. 

Securities & advisory services offered through Commonwealth Financial Network, member FINRA/SIPC, a Registered Investment Adviser.