What a strange year so far! Almost nobody would have thought that two weeks into 2016 oil prices would plunge below $30 a barrel, the Chinese yuan and markets would take a dive and other worldwide markets, including ours in the U.S. would follow. It would only be stranger if one of the major lotteries had a prize that was worth more than $1 billion…wait, that happened too!
It’s easy to become nervous, worried and anxious about 401k investments, stocks, bonds, mutual funds, and the market in general. But, is the sky really falling? A friend of mine, Jim Heard heads a financial management firm called TrueWealth Management. This past Friday he sent this letter to his clients and it contains some wise and interesting advice for all of us who have any money in the market. Enjoy!
|Sifting and Winnowing
A Brief Perspective on Current Market Trends I suspect there are some academics and some biblical scholars who might identify with the phrase “sifting and winnowing.” Its literal meaning is to separate (sift) as with a sieve used for straining food and to blow away (winnow) the undesired from the desired. “To sift and winnow the chaff from the corn.”
No. I haven’t lost it.
But this phrase aptly explains what’s happening in markets today. The inevitable downward move in the markets that periodically occurs is “sifting and winnowing” the short term market participants from the long term investors.
As with all market downtrends, the faith that capital markets provide positive returns in the long run is tested. Eventually, most or all who remain are those who truly believe that it’s not a matter of future events or a new strategy that’s needed; it’s simply a matter of time before the markets will reflect what they always do – the positive interaction of mankind through business dealings as it achieves the improvement of the human condition.
And that reflection of the positive interaction of the human element is seen in positive long term market returns.
And for our biblical scholars, you know what happens to the chaff…
So don’t get burned. Stay the course. Good returns are coming.