Patience is a Virtue

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Patience is a Virtue

By Jeffrey R. Karp, CLU, ChFC, CASL®

Everyone knows that investing in the stock market can be an emotional and sometimes gut wrenching experience.  We only need to look at last Thursday, Dec. 3rd and Friday, Dec. 4th as prime examples of why maintaining a long term view of investing is so important.

The S&P 500* index opened on December 3rd at 2080.71 and closed at 2049.62, approximately a 1.5% loss.  While the index has been down this much (or more) before, it seems that investors still want to sit on pins and needles waiting for the next big down cycle.  What contributed to the lack of market performance?  The main news item of that day was an announcement out of Europe that while the European Central Bank (ECB) was going to continue their economic stimulus efforts, the action steps were not as aggressive as expected. 

The S&P 500* index opened on December 4th at 2051.24 and closed at 2091.69, approximately a 2% gain.  This move appears to have been a reaction to positive employment numbers that were announced Friday morning.

Some other key factors that have been affecting the stock market:

  • the debate on when the Federal Reserve will raise interest rates;
  • the direction  of the price of a barrel of oil; and
  • economic expansion in developed Europe.

It is no wonder the stock market cannot get a firm trend established.  Remember that investment decisions are made with a “best guess” on how these and other issues will work themselves out.  Investment performance is a hindsight view of how they did work themselves out.

As we prepare to publish our 2016 outlook for the investment themes and potential opportunities, we want to re-iterate that creating wealth is a long term commitment.  Many trends take time to develop and will not occur in a straight line.  Be true to your personal investor suitability profile and be patient with the volatility that we are expected to see again in 2016.

 

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.  All performance referenced is historical and is no guarantee of future results.  *The S&P 500, or the Standard & Poor's 500, is an unmanaged stock market index based on the market capitalizations of 500 large U.S. companies and their stock.  Asset allocation does not ensure a profit or protect against loss.

Securities and Advisory Services provided through LPL Financial, a Registered Investment Advisor, Member FINRA, SIPC.