Movies, Reality, and Drama
Tuesday, December 22, 2015
Yes, I was among the millions who went to see Star Wars Episode VII over the weekend. I went to the movie with my 18-year-old triplets who thought that a midnight showing would be fun.
If you are a Star Wars fan, you will like the movie. If you are 50 years old like me, midnight is just too darn late to see a movie.
On that note, because it is the holiday season I can tell you that based on the previews that are shown prior to the movie, take some time and enjoy a movie during the holidays. There are some very good ones that will roll out over the next few weeks!
Okay, enough of fantasy and back to reality. At long last, the Federal Reserve finally made the decision to reverse course and change their policy of near zero percent interest rates. The Federal Reserve unanimously decided to raise rates by 0.25 percentage points, the first rate hike by the FED since 2006.
What this means for the markets in the short term, who knows? Perhaps we get a Santa Claus rally? Perhaps the pundits of pessimism finally are correct and the markets will have a severe correction because the sugar high provided by the FED for the last seven years was the only reason for the stock market s recovery?
The talking heads on television that cover the financial markets will now turn their discussions to the topic of how fast the FED will now begin to raise rates over time and will there be another rate hike at the next meeting. The headlines have highlighted a couple of investment groups that invested heavily in junk bonds that may or may not have to close up shop because of the pressure on energy companies debt.
The drama provided by the financial news channels and media is certainly in a full press mode. Questions and speculations include how low can oil go? Can you believe the ECB now has a negative interest rate policy? And, it must be really bad in Europe and Asia!
As I type this rant the reality is that as of Dec. 18, 2015, the year-to-date return of the S&P 500 is a negative 1.88 percent and the year-to-date return of the Dow is a negative 3.22 percent. These are hardly numbers that should cause an investor to set his or her hair on fire, but the perception seems to be that the investment markets are horrible.
If you are investing for the long term and have been investing for several years, you know that negative returns are a normal part of investing. Simply put, there are some years when you don t make money. The test during those times is whether or not you have the discipline to stick to your plan or even invest more money when the rest of the world seems to be selling.
Maybe it s time to have that check up with your advisor and touch base regarding your investment allocation and the goals you have set.
In closing, I am blessed to have my oldest home from college for the next couple of weeks and the rest of the tribe off from school. My plans are to focus on what is really important and spend some time with my family and loved ones. I hope you can do the same.
I wish all of you a Merry Christmas and a Happy New Year!