Economic Update

"The exponential progress over the next year will surpass all of the progress over the last 100 years by at least 2,000 times!"
-Ray Kurzwell

Recently, many of us in the investment committee here at AIFS sat through an optimistic and realistic look at the investing landscape we are in today from Marshall Schield, a local investment manager. I thought you might enjoy a few key takeaways. They are his opinions, not ours, but I'm sympathetic. And because they stand in direct opposition to the onslaught of pessimism from the world's news sources, it should be a pleasant, brief read.

A major part of our economy is in recession: oil and gas. We've likely seen the worst of it, but it's not over yet. Thinking about that major collapse in oil prices, and the comparatively minor shock to the world's stock markets, gives Mr. Schield comfort in the resilience of the world's companies to continue to employee people, provide value, and make money for their investors.

Furthermore, low oil prices are Robin Hood for U.S. consumers. The economic benefit of $30 oil vs. $40 oil is more than $400 billion annually. That is a huge stimulus. Think about that--could anything the U.S. federal government does come close to what the markets did to put money into consumers' pockets than a lower price for gas and oil?

Mr. Schield thinks stocks will find a floor sometime in the not-too-distant future; low prices for oil and commodities are part of it. They are each a big stimulus. He calls this a "teddy bear" decline in the stock market.

A second reason for optimism is that we typically have a rough few months as we enter a presidential election year. We have no incumbent, so no one is sure what the new candidates for president will mean for their portfolios. And the ones who are trending well are the populist outsiders who want to shake things up.

The rest of the world, it seems, is doing some version of their "quantitative easing" in an attempt to put a floor under stock prices. So, all of these macro factors give Mr. Schield hope, and he predicts a "teddy bear" beginning to the year, followed by solid growth. We shall see!

What can we do? Here's some good advice:
1. Don't panic, don't sell, and above all, don't try to time the market.
2. Falling markets present buying opportunities (particularly if you believe Mr. Schield).
3. Stay the course: ask your advisor what is right for you.

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