At Least You are Aware

I thought I would give you a heads up on a longer term picture of the S&P 500. As you can see from the 20–year chart above the market took a turn for the worse this past August. A similar set up occurred in both 2000 and 2008. Coincidentally or not they both happened to be Presidential election years as is 2016.

No-one has a crystal ball but at least a bit of caution might be in order. There are a number of things that could negatively affect the market going forward:

  1. An increase in interest rates by the Federal Reserve
  2. Continued declines in commodities
  3. Further currency declines in emerging markets
  4. Strengthening US Dollar and its negative impact on earnings
  5. Russia’s aggressive stance towards Syria and the Ukraine

For those of you interested in some sort of plan against the possibility of a difficult 2016 here are a few ideas I’m doing:

  1. Trim overweight holdings and sell expensive or marginal businesses to reduce your market exposure
  2. Buy puts on the market to protect your downside
  3. Buy inverse funds to hedge your current holdings

I don’t know what the future holds any more than you do but the chart above does give me reason to be cautious until stock prices justify increasing my exposure.


The information contained herein does not suggest or imply and should not be construed, in any manner, a guarantee of future performance and/or investment advice. Past performance does not guarantee future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, investment strategy (including the investments and/or investment strategies recommended and/or purchased by Burgess Investments), or product made reference to directly or indirectly on this newsletter or company website, or indirectly via link to any unaffiliated third-party website, will be profitable or equal to corresponding indicated performance levels. Returns are historical and based on data believed to be accurate and reliable. We believe the above information is reliable and true but cannot guarantee its accuracy.
David Burgess