February 15, 2016

 

 

 

 

The Markets There was bad news and good news in last Friday’s unemployment report. In the negative column, fewer jobs were created in the United States than economists had predicted, and January’s jobs gains were not as strong as December’s had been. In addition, the December jobs increase was revised downward from 292,000 to 252,000. On the positive side of the ledger, more than 150,000 new jobs were added in January. The unemployment rate fell below 5 percent for the first time since February of 2008 and earnings increased. In total, average hourly earnings have moved 2.5 percent higher during the past 12 months. Good news plus bad news equals uncertainty and that’s a state of affairs markets strongly dislike. In January, slower growth in China and low oil prices had markets in a tizzy. Last week, the Standard & Poor’s 500 Index gave back more than 3 percent and in January the index was – 6 %  as investors tried to decide if the weakness in China and oil was going to get worse. I have maintained a series of re-balancing accounts during the past weeks and will continue to do so if this weakness continues to hold. When investors are emotional and markets are volatile, it can be helpful to remember the words of Ben Graham, author of The Intelligent Investor. Warren Buffett shared Graham’s thoughts on ‘Mr. Market’ in a 1987 shareholder letter. In part, it cautions: “…Like Cinderella at the ball, you must heed one warning or everything will turn into pumpkins and mice: Mr. Market is there to serve you, not to guide you. It is his pocketbook, not his wisdom, that you will find useful. If he shows up some day in a particularly foolish mood, you are free to either ignore him or to take advantage of him, but it will be disastrous if you fall under his influence.”

 

Weekly Focus

“Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly, and applying the wrong remedies.” -Groucho Marx, American comedian

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