2015 is looking good, but watch out for 2016!
Tuesday, January 6th, 2014
2015 will be a very good year for the U.S. stock market and the beginning of the ease in bond prices. The economy willcontinue to grow at a good pace. However, 2016 will be when many things begin to unravel.
The pressure from rising interest rates and the stock market that created an overvalue situation in 2015 will cause negative returns in 2016. And 2016 will bring the election of a new president, which will also cause uncertainty in the stock market.
2016 will be a difficult year to make money anywhere; bonds will still be declining, stocks will come off of their high valuations and real estate will not have many great opportunities, either.
A positive return in 2016 of 1 to 2 percent should be welcomed by any investors.
Some good places to be in 2015 will be the energy sector, specifically oil companies, as we see oil reverse course.
Biotechnology drug companies should find footing again as the threat of companies such as Express Scripts trying to hold down the prices subsides.Technology should once again continue to shine.
With rising interest rates, banks should also have a good year.But be careful: Banks that take on a lot of debt from Russia could have problems paying that debt back into 2015, if oil prices remain lower than Russia would like.
Utility companies have done very well the last few years and 2015 should be the end of the rise as valuations are well above fair value and rising interest rates will pose problems for utility companies.
Facebook and Twitter could have another good year. If they see positive returns in 2015, the decline in 2016 will be far greater than many can handle.
There could be as much as a 10 percent correction in 2015. However, this will be looked at as a buying opportunity unless it happens in the fourth quarter of 2015, which could put an end to returns for the year.
So while there will be volatility, it will be a good year come Dec. 31, 2015. And on Jan. 1, 2016, put away the party hats as the media rejoice in the negative news they can spread.
Do you have a question or a company you'd like me to take a look at? Email me at Brent@WilseyAssetManagement.com!
Wilsey is president of Wilsey Asset Management and can be heard at 8 a.m. every Saturday on KFMB AM760. Information is provided by Reuters.
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