2015 Recap and 2016 Forecast

The U.S. Stock Market Closes the Year Under Some Pressure

Well, from what I can tell there’s bad news and some other kind of news.  I’ll just give it to you straight.

First off, if you were 100% invested in the total U.S. stock market all of 2015 as I was, you saw record highs and then steep drawdowns.  Here’s the bad news, according to my calculations we finished basically even for the year.  I calculate a gain of approximately 0.4%, all that work for NOT a whole lot of gain.

If you had all of your long term money in a money market account (like a federal money market fund) you earned somewhere around 0.05%.  If you had all of your long term money in a bond market account (like an intermediate government bond fund) you earned somewhere around 1.6%.  All in all, not a good year for the long term investor.  Here’s some other kind of news, my studies indicate we may be in for another pull back.  I use a specific type of study/indicator that is constructed in parts.  We build it in parts so that we don’t panic over noise and we don’t stick around once we get conformation.  As of this writing the market has completed 2 of the 3 parts needed to indicate that another drawdown is at hand.

So, I told you back in October that we needed to clear 18,400 in the Dow before we could start to have additional faith in the continuation of this bull market.  As we have not been able to do that and we now have seen the longest leg of growth (40+ months) in this market since the bull started and we see a real possibility of a sell signal, we have cause to be diligent.

Let me tell you what I am going to do, I am going to continue to leave all of my long term investment capital invested in a total U.S. stock market mutual fund.  I will continue to invest any additional money I may have into a total U.S. stock market mutual fund.  If we get a single close, on a monthly basis, below 15,300 in the Dow. I will be taking additional measures. 

I will let you know what additional measures I will be taking if and when it becomes necessary.

Stay tuned.