A Bumpy Start to 2016

Thursday, January 28, 2016

Financial markets have started the year on a rough note as last year’s worries about China and global growth in the face of US monetary tightening continue. This could drive more short term weakness. However, in the absence of US/global recession, which still seems unlikely, it’s hard to see a GFC style bear market. The key for investors is to recognise that shares offer a higher return potential after sharp falls, selling after big declines just locks in a loss and that dividend income from a well-diversified portfolio is little affected by share market volatility.

2016 has started much where 2015 left off with basically the same worries driving another bout of share market falls.

Geopolitical concerns have played a role but the main issues are uncertainty regarding the Chinese economy, wariness

about the Fed raising interest rates and the impact of a rising US dollar and falling Chinese Renminbi.

Read more:   /userfiles/Roughstartto2016.pdf