Investments

The Market Downturn: A Millennial’s Best Friend

By January 22, 2016 June 6th, 2019 No Comments

The babbling of the news and negative investor sentiment has had a profound impact on the stock market to start 2016. Stocks are hitting their low point since ’09 and oil continues to crash harder than the UT Rockets when they play NIU.

Doom and Gloom is something we’re used to at this point but that doesn’t mean we can’t use it to our advantage. Aside from this, the downturn of the market could prove to be a millennials best friend, why? Because they aren’t in the market….yet.

Imagine if you could’ve gotten into the stock market at its lowest point in 2009, and rode the S&P 500 to its highest point in 2015. Do you know what the return would have been?

 

215%

 

215% return in 6 years. Unbelievable. The stock market went on a six-year tear that can only be compared to this the Rockets domination over Bowling Green in that same time frame. If you could go back to that day, what would you do?

Welcome back to 2016. Where earnings and profits are strong and oil is still just as necessary to human life as it was 6-months ago. Nobody really knows what the market will do, but we do know this:

  • Less than 1% of Americans drive an electric car .
  • Over 35 Billion barrels of oil were used last year.
  • China’s GDP growth is still higher than the USA’s.
  • Of the 21 companies in the S&P 500 that have reported earnings to date for Q4 2015, 76% have reported earnings above analyst expectations. This is above the long-term average of 63% and above the average over the past four quarters of 69%.
  • Last week was the worst week for the S&P since 2011.

 

If we stick to the old adage of “Buy low, sell high” then right now marks the best opportunity for new investors to enter the stock market since it’s last low in 2011 – five years ago. Investors are fearful even though companies’ earnings are beating expectations. The Fed is tightening rates, which to most shows the strength of the United States economy. Consumer spending is increasing. And lastly – people are scared because they are remembering what happened in 2008. Everyday investors are jumping ship to save whatever principal they have left, but there is no catastrophic reason to worry. Yes, big banks are exposed to oil and China but nothing compared to what happened 7 years ago. They got robbed in 2008 and now they hear the robber’s knocking at the door once again. Understandable for them, but an opportunity for everyone else.

It’s time for millennials to ask themselves the hard questions. If you’ve been thinking about jumping in, now might be a good time. Here’s my first lesson on investing:  do pretty much the opposite of what every else is doing. It’s worked before and is poised to work again.

 

– Eric Croak

 

1 – http://finance.yahoo.com/echarts?s=%5Egspc+interactive#

2 – http://www.ucsusa.org/clean_vehicles/smart-transportation-solutions/advanced-vehicle-technologies/electric-cars/bev-phev-range-electric-car.html#.VqI6aSorKhc

3 – https://www.iea.org/aboutus/faqs/oil/

4 – http://www.gurufocus.com/news/330878/chinas-economic-growth-vs-the-us

5 – http://www.trpropresearch.com/pdf/This_Week_In_Earnings.pdf/

6 – http://www.bloomberg.com/news/articles/2016-01-11/futures-signal-more-losses-after-s-p-500-s-worst-week-since-2011

 

*Securities and investment advisory services offered solely through Ameritas Investment Corp. (AIC). Member FINRA/SIPC. AIC and Creative Financial Partners are not affiliated. Additional products and services may be available through Eric T Croak or Creative Financial Partners that are not offered by AIC.

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