Volatility? From Sumner Wealth Management





Dear Visitor,

Most of you are wondering what is happening to the market!  I want to assure you, that we are not going into a recession and the U.S. economy is stable. 


There are really 5 factors that are causing the market to drop, but OIL, globally is to blame. 

  1. Good old Supply and Demand has caused the oil prices to drop.  Over the past several years, the demand for oil had decreased, but the production of oil has stayed the same.  Thus, causing a stock pile of oil, not only in the U.S. but in the Middle East.  Saudi Arabia has drastically lowered the cost of oil, causing a domino effect and other producing countries are in a bidding war.  Each oil producing country is lowering their cost of oil, causing the price of oil to hit records low.  This has happened in 2002, 2008, 2011 and in the present.  
  2. China - Over the past 5 years, China's economy has been declining due to a housing bubble.  The same same kind of housing bubble we witnessed in 2007.  I believe China will go into a recession with in the year or early 2017 due this cycle.  Also, their yen had decreased in value, causing the dollar to be stronger, imports will continue.  American's are not spending as much as we did over the past years, so China's exports will cause the yen to drop more.
  3. Japan - Japan is feeling the effects of the 2011 Tsunami that killed more than 240,000 people and slowed down their technology research.  The result, a lack of employees or workforce.  Companies are subcontracting their work out to meet the demand. 
  4. Earnings - For the past 7 years, American workers have not received a pay raise, causing less spending in the U.S.  Mos of us are holding on to what we have, renovating, and spending less on goods.
  5. Interest Rates - The Federal Reserve raised rates in December 2015, and the market reacted.  Now, the Fed's want to raise interest rates next month, but the U.S. Economy cannot with stand another rate increase. The dollar is weak at 6%, compared to 8% and the Energy Sector is down 12%. Simply put, the U.S. Economy is stagnate, at 2% (Avg. 4%)  Good news the unemployment rate has decreased, employment is up and GDP.   

So, what should investors do?

  • Do not let your "feelings" take control of your goal.  Stay invested and maintain a disciplined approach.  "Stick to the Plan" and don't listen to the commentators on the news.  The news will scare you, it's their job to gain the most viewers, plus they are trying to make a name for themselves.  No one has ever predicted the market.  If they did, we would not have one!
  • Keep diversified, and hedge against the down turn or Bear Market. It's a challenge to make money in a Bear Market, but over time, you will come out on top.
  • Review your portfolio and see if any changes need to be made.


I hope this helps relieve a little stress but overall, the market is all about simple economics (supply/demand).  This year will be volatile, big swings, and we will know more in the 3rd QTR.  However, my feeling, we will see a Bull Market in early 2017, and by late 2017, we will see another Bear Market.  This is just my opinion and I welcome any you to reach out if you have any questions.

Mark Sumner

Financial Advisor


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Sumner Wealth Management,Inc. | 517 Alcove Road | Suite 202 | Mooresville | NC | 28117

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