Today’s market update…12/11/15

Days like today in the investment markets lead me to share with you my thoughts, observations and reassurance that we have your account well positioned and diversified.

U.S. stock indexes finished off a dismal week with large losses again today.   The major indexes all fell around 2% today, with the S&P 500 suffering nearly a 4% fall for the week. All 10 of the market’s primary sectors sold off today. A sharp fall in crude oil prices to near seven-year lows, as well as continued volatility in the currency markets weighed on global investor sentiment. Volatility absolutely spiked today, which is the truest measure of investor’s level of comfort. The volatility gauge, the “VIX”, which is also referred to as the “fear index,” soared over 26% today.

In addition to the extreme move in the VIX today, other moves in the broad market are noteworthy and underscore the challenges the current market is facing in its attempt to deliver a sustained rally. As of today, the S&P 500 has booked 27 consecutive sessions without back-to-back gains. This is the longest streak since 1970! This week’s decline for the S&P 500 was the worst since mid-August has pushed it back to its level on October 14.

One specific concern contributing to today’s market sell-off is the potential for default in bonds issued by some energy companies hurt by the drop in oil. Their liquidity came into question as one bond fund froze withdrawal requests. You should know we do not hold any of these types of investments in your account or have any exposure to investments that do. 

While oil’s drop and expectations of an interest rate hike next week are adding to the market’s uncertainty and fear, there are investment beneficiaries to both of those events and your account owns both. So, fear not!   We plan to stay the course, holding dividend payers, best-of-class growth, and global diversification. Our best defense strategy is also encouraging, especially when the “fear index” spikes like now.