In a day or so, we will be posting our annual review of the 2015 newsletter. Our primary observation about 2015 is this: the market is not the economy. The US economy actually did pretty well, but global markets, including the US, suffered because global growth is slowing down. US markets were dragged down by foreign economies; of course, foreign markets suffered to a greater extent.
The New Year has already suffered a pretty bad trading day in global markets, borne on poor fundamentals from China (and ongoing tensions in the middle-east). So, this prompts the next question: what is China’s market going to do this year? If you listen to David Cui, head of China equity strategy for Bank of America Merrill Lynch, he expects the Shanghai composite index to end 2016 down 27%, due in large part to unwinding debt which can cause “financial system problems including currency devaluation, banking recap, and high inflation”. US investors, whether they acknowledge it, invest in a globally connected entity, so we may all have to endure significant volatility during 2016.