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December 2016 Stock Considerations

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The final ‘stock considerations’ post of 2016 is finally at hand. At the beginning of the year it’s sometimes hard to imagine what the next twelve months will have in store for us as we outline our dividend income goals, future buys and more. What is certain is that no one can accurately predict the future no matter what their credentials may state.

All you can do with certainty is be consistent with your dividend investments, seek out relative good value and sustainable yield and not panic when the market declines and your portfolio bleeds red. Do that, have patience and everything else will fall into place. It just takes time. After all, to look back at 2016 and call the market performance we have seen a roller coaster ride would be a huge understatement.

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If you recall, 2016 was one of the worst starts of the year, ever, for the markets. The ‘smart’ talking heads and financial headlines all spoke of doom as the impending crash we have all been waiting for was finally at hand. Headlines like, “Stock market’s terrible start to 2016 just got worse,” “Ouch. 93% of investors lost money in January (1),” and “U.S. stocks post worst 10-day start to a year in history,” among many, many more.

Just seeing these headlines is enough to make one panic and sell everything and ‘ride out the storm.’ Of course, looking back we know that after the brutal start to 2016 stocks climbed back up and started to look ‘frothy’ once again. Sure, valuations for many stocks did not make sense, the bull market was ‘long in the tooth’ and the Fed was running out of dry powder to help prop up the market with its bond buying activity and maintenance of low historic rates but the market kept climbing higher bit by bit, nothing too dramatic. Succumbing to the media panic would not have been wise.

Then, the dreaded date, June 23, 2016 United Kingdom European Union membership referendum aka Brexit was to take place. Again, the ‘smart’ talking heads and financial headlines all predicted a certain ‘no’ vote to prevail as the U.K. was sure to remain a part of the European Union. The pollsters and markets all anticipated this result as shock and steep market declines eventually prevailed as news that the U.K. did indeed vote ‘yes’ to cede membership in the European Union.

Once again, global stocks were in free fall and headlines looked quite scary as we read, “Brexit Roils Wall Street, Stocks Extend Global Selloff.” Over the course of the next few weeks and months those scary Brexit headlines were replaced by “Here’s why the majority of Brexit polls were wrong (2),” and “Here’s why pollsters and pundits got Brexit wrong,” as the market roared back in the summer and financial experts were left scratching their heads. Not to be outdone by the terrible stock market start of 2016 and the historic Brexit vote which took place, the financial media began to turn their sights on another potentially devastating event which could trigger a financial meltdown, the U.S. presidential elections. Oh my!

Here we go again… “Donald Trump Victory Would Send Stocks Plummeting 10 To 15 Percent,” and “Stock Markets Are Starting to Freak Out About a Donald Trump Victory (3),” among many other equally negative and scary headlines. And again, “How did pollsters get Trump, Clinton election so wrong?

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