March 2016 Financial Markets Summary

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us.”  This famous opening from Charles Dickens’ A Tale of Two Cities depicts the plight of the French peasantry demoralized by the aristocracy in the years leading up to the revolution. It might also be applied to the extremes of viewpoints we hear from our broadcast media today in 2016.  Some tell us how terrible everything is, while others say things are great.  As is often the case, both extremes have some points, but the truth is often somewhere in the middle.

As we noted last month, investors don’t like uncertainty.  We want simple explanations.  We want our investment plans to work now. For companies in the oil and traditional energy sectors, it probably seems like the worst of times.  Same goes for many health and biotech firms.  For real estate developers and builders in many regions of the U.S., it is a season of light. Technology has created some great opportunities, but this has come at the expense of many traditional jobs. The dichotomy is always with us. February was a flat month for most markets, a welcome change for all.

The markets have been in lockstep with oil this year.  Every day, you can almost guarantee that if the price of oil has moved higher, so will the stock markets.  At what point will these two disengage?  There has been speculation that, if oil prices settle around $40 a barrel, the markets might once again act in a normal fashion (what is normal, we wonder). Clearly the key is to somehow reduce the supply of oil.  Despite the continued increase in global demand for oil, the increased supply has been too much. The recent decision by OPEC to freeze oil output may or may not have much effect on prices.

There has been considerable discussion of whether the U.S. is facing a recession.  At this point at least, the data is just not there for a recession.  The monthly jobless claims continue to drop, industrial production has actually started to pick up, and consumer spending – always a key component of our economy – is relatively strong.  All of this suggests things are actually getting better.  This is not to say we are moving toward a booming economy, but these trends are not indicative of a recession.  The importance of a long-term, diversified investment strategy is huge.  Otherwise you are left to chase the most recent hot performers, or find yourself paralyzed by fear.    Be sure that your expected withdrawals for the next 3-5 years are protected, and always remember that today’s headlines and tomorrow’s reality are seldom the same.

Asset Index Category Category Category Category 10-Year
1 Month 3 Months 2015 Average
Dow Jones Industrials – Large Cos 0.3% -6.8% -2.2% 4.2%
S&P 500 Index – Large Companies -0.4% -7.1% -0.7% 4.2%
S&P 400 Index – Mid-Size Companies 1.3% -8.7% -3.7% 5.6%
Russell 2000 Index – Small Companies -0.1% -13.7% -5.7% 3.5%
MSCI EAFE Index – Developed Intl. -2.1% -10.5% -3.3% -1.3%
MSCI EM Index – Emerging Markets -0.3% -9.1% -16.4% -0.5%
Short-Term Domestic Bonds 0.1% -0.2% 0.2% 2.8%
Multi-Sector Bonds 0.4% 1.0% -2.1% 0.8%
Global Government Bonds 1.0% 0.5% -3.9% 3.8%
Bloomberg Commodity Index -1.6% -6.3% -24.6% -6.3%
Dow Jones U.S. Real Estate -0.7% -3.7% 2.1% 4.9%
World Allocation Global stocks, bonds, commodities -0.4%  -5.3% -4.4% 3.7%


Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment, strategy, or product or any non-investment related content, made reference to directly or indirectly in this newsletter, will be suitable for your individual situation, or prove successful. This material is distributed by PDS Planning, Inc. and is for information purposes only.  Although information has been obtained from and is based upon sources PDS Planning believes to be reliable, we do not guarantee its accuracy.  It is provided with the understanding that no fiduciary relationship exists because of this report.  Opinions expressed in this report are not necessarily the opinions of PDS Planning and are subject to change without notice.  PDS Planning assumes no liability for the interpretation or use of this report. Consultation with a qualified investment advisor is recommended prior to executing any investment strategy. No portion of this publication should be construed as legal or accounting advice.  If you are a client of PDS Planning, please remember to contact PDS Planning, Inc., in writing, if there are any changes in your personal/financial situation or investment objectives.  All rights reserved.