As we enter 2016, the stock market has taken its first significant tumble. The Chinese market opened very volatile and even had to be closed down. In the Middle East, tensions with Iran and Saudi Arabia have escalated and sent oil which has already been turbulent, into more turmoil. There are uncertainties in Europe too and its’s unclear if the U.S. economy is going to strengthen into 2016. With all this going on at once, what about your own portfolio now?
For the most part, oil is going to stay down throughout 2016. There’s still too much of it in the supply chain and this is driving down oil. If tensions with Iran and Saudi Arabia boil over oil may go up, but for now it’s going to remain low. Oil is still the most uncertain part of the overall stock market going into 2016 and it should be treated that way. It’s too soon to tell what oil will do in 2016.
The market may seem like it’s having problems now, but this isn’t the time to panic. In 2015, we saw many ups and downs in the market. One of the main factors driving this is the price of oil and the other low commodity prices. If commodities remain low throughout 2016, then the market will reflect this. There’s no reasons to panic with your stocks over low oil as it’s going to rebound sooner or later. Panic selling is the worst thing you can do, even when things seem bleak. Look at the fundamentals of the company and if they are sound, you don’t need to sell. Some of the smaller oil players may be in trouble if oil remains low or could be bought out, so you’ll need to watch this if you have investment sin these areas.
With oil and commodities and low points, this is the time to buy. These stocks may not be this low for a very long time. You can find a lot of deals in the stock market now that things are volatile and there are stocks worth picking up. Commodity stocks like oil may plunge even more, so you may want to wait a bit and see where they go. If you’re in these stocks and are concerned about prices, just hold onto your stocks and wait. Once oil rebounds, many of these low stocks will go back up as it’s all supply and demand issues with oil and related stocks.
There will more than likely be more volatility in the Chinese market due to their corruption and other problems which will impact the U.S. markets to some degree. This is still not a reasons to panic as U.S. companies are still sound investments.
Bear Market 2016
The New year could see a bear market develop to a greater degree as we are long overdue for one and the U.S. market is overvalued by a wide margin. 2016 could see more plunges in the overall averages, but many buying opportunities which shouldn’t be overlooked by investors.