06 Oct 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:
- An increase in interest rates by the Federal Reserve
- Continued declines in commodities
- Further currency declines in emerging markets
- Strengthening US Dollar and its negative impact on earnings
- 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:
- Trim overweight holdings and sell expensive or marginal businesses to reduce your market exposure
- Buy puts on the market to protect your downside
- 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.