The Yoyo Syndrome

What you have been seeing the last couple of weeks is what you will continue to see until oil prices rebound.  For the American oil man if the price of oil is not above $65 per barrel they are operating in the red.  With oil currently selling at $60 per barrel gas, oil and energy stocks take a beating.  Not until OPEC cuts back on production and the price per barrel raises the fluctuations in the stock market will continue on this same path and the market going up and down like a Yoyo.  Why?  Because their are a few different points of view.  Let me explain.

My personal belief is that overall we have a recovering economy.  We are not headed for another recession so long as there is not a panic over the oil situation and people start getting stupid.  You know sometimes you win and sometimes you lose.  Those that have all their eggs in one basket in the energy sector are currently losing.  But why punish all the other sectors of the market because we currently have one bad apple in the barrel. (Pardon the pun).  That is my point.  The other sectors are doing fine and making money.  Why should they and us be punished in the stock market due to the one bad apple.  Let energy take the hit and leave everyone else alone.  Retail is up, consumer goods are up, healthcare is up etc., so why allow the energy sector to poison these holdings in market and our portfolio's.  That is a similar view of many of the experts.  But you always have the Nervous Nelly's that thing the sky is falls when everything is not 100% perfect.  I have Energy stocks like ConocoPhillips and Royal Dutch Shell.  Two big oil companies make up a small part of my portfolio.  Okay I am losing a little money on them right now.  But they pay a good dividend and it is not a total loss.  The rest of my portfolio is looking good and I am carrying positive gain percentages in my portfolio for the year and the market at year end is going to be right about where I predicted for us that it would be at the end of 2014.  So really I cannot complain and you should not either if you have your entire portfolio weighted and balanced as I have been trying to teach you.  If your portfolio increases between 8% to 12% this year I think you should consider yourself as doing well.  More than 12% you did excellent.  Below 8%, perhaps you need to reevaluate your portfolio and tweak a few things.

Do remember when building your portfolio some basic rules.  Good foundation in your portfolio with a couple of good Balanced Mutual Funds.  Only put 4 and 5 Star mutual funds in your portfolio.  Make sure your mutual funds are diverse.  Some bond funds, some Large Cap, Midcap and Smallcap funds.  Some Foreign Market Funds as well...but be careful.  I personally never like Foreign Market/International Mutual Funds and I have done very well in my portfolio without them.  I am sure your financial advisor will differ from my opinion.  No more than 40% of your holding in Individual Stocks.  Use good quality stocks that pay dividends...any dividend, not necessarily the highest dividend.  And make sure to weight your Individual Stock holdings across the various market sectors.

See you guys next year.  Off now for vacation to see my relatives for the holidays.  Each and everyone of my readers, please have a happy and safe holiday season!


Gus S.


Disclaimer: Make sure to review any information found on this blog site with your personal financial advisor before making any decisions. I am providing general information and not financial advise. I am not a licensed stockbroker or financial advisor.