Financial lessons from a wild, unpredictable year in markets
Lessons learned in 2016 include investing for the long term: Fads like Pokemon Go have a short life. Credit: Getty Images / KeongDaGreat
There are a few things that can be said about 2016 — it was fast, freaky and full of financial lessons.
The hope is not to fail at the school of hard knocks, but to learn the lessons and let them help move you forward in the new year.
What exactly did 2016 teach us?
You never know
“I hope it opened people’s eyes to the fact that the future is unknowable. U.S. stocks had the worst beginning of the year ever. Toward the bottom, a European investment bank famously told their clients to ‘sell everything.’ Stocks went straight up in the spring, followed by a brief blip from the Brexit vote that virtually no ‘expert’ saw coming,” says Damon Gonzalez, a certified financial planner with Domestique Capital in Plano, Texas.
Then there was the Trump triumph. “The so-called experts predicted if he won, the market would drop. Instead it’s rallied. What’s the lesson? Don’t follow the crowd. Invest for the long term,” says Mark Snyder, a financial adviser in Medford.
Just say no (to overspending)
“Kanye West tweeted he was $53 million in debt while earning about $25 million a year because his unbelievable spending has put him in the red. The average person can make the same mistakes on a smaller scale. Get another year out of your present car and use the savings to pay down debt or save for your retirement,” says financial adviser Michael Mondiello, a financial adviser in Manhasset.
Beware of the “bond trap”
Garden City wealth manager Bradford Pine says there may be more interest rate hikes to come. “You may already have a lot of bond exposure in your retirement plan. Avoid low-grade, leveraged, longer term bonds. Find out what you’re invested in.”
Yesterday’s losers can be today’s winners
In late 2014 oil prices took a nose-dive among a sea of supply and lessening demand, going from more than $100 a barrel to below $30. However, since the first quarter, oil has rallied more than 80 percent, says Eric Meermann, a certified financial planner with Palisades Hudson Financial Group in Scarsdale. “Some fads are just that fads. Pokémon Go? Who cares about that now?”
