Usually I say “Happy New Year” in my first newsletter of the year, but the stock market has been correcting from Monday to today and it never feels very good when this happens so I will refrain from this saying this year. Know that I hope for you and your family a healthy, safe and prosperous 2016.

The reasons for current stock market concern are China and lowering oil prices. China is converting from a manufacturing based economy to a consumer based economy and in this transition their growth rate is slowing. The Chinese government, according to LPL Research has made some blunders in handling the Chinese stock market volatility and this has spilled over to ours and foreign markets. Oil prices have made new lows in recent weeks and the worry this generates is that oil prices have become an indicator of sorts for further global economic weakness. The bottom line is our stock market never likes uncertainty and these two concerns have created exactly that.

So, is all the news bad? No! The Federal Reserve raised interest rates for the first time in nearly a decade because of improving United States economic data. Holiday shopping totals are not yet final but the numbers so far are quite good. According to MasterCard’s spending pulse, retail sales during the holiday season rose 7.9% year over year excluding autos and gasoline sales. E – Commerce drove the strength with a reported 20% gain. The most complete picture of holiday shopping will come from the government’s official statistics for December (due out January 15, 2016) while results from the retailers themselves, mostly out in February, including gift card sales, will go further in determining how the stocks will perform.

Looking forward there is a good note to lower energy prices and rising healthcare costs. Instead of only hiring new employees, investing in new equipment and/or productivity enhancing software has become a compelling need for corporate America. LPL Research expects this increase in capital expenditures to probably add to Gross Domestic Product (GDP) growth as it consistently has since 2010, and over the course of 2016, do as well.

To sum up, there are periods when stock markets simply trade in a “range”. Most of our diversified investments pay out dividends and/or capital gains periodically and when equity prices drop, these dividends and gains frequently reinvest at cheaper shares. This is called “Dollar Cost Averaging” and is a very effective investment tool. The key to the investment process is “time in the market”, not “timing the market”. As always, please call me with any investment questions you may have and know that we appreciate your business. – Mark  

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Some of this research material has been prepared by LPL Financial. The Standard & Poor’s 500 Index is a capitalization weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries. Referenced material: LPL Financial Weekly Economic Commentary and LPL Financial Weekly Market Commentary, both dated January 4, 2016. Reference Tracking #: 1-455172.