Looking Ahead: Intriguing Investing Ideas for 2016

Looking Ahead: Intriguing Investing Ideas for 2016

The end of the year is often a time when investors examine their portfolios and consider making changes. Is it smart to stay with 2015’s winners? How about betting last year’s underperforming sectors will bounce back? The energy sector, for example, was down 22% in 2015 after dropping 10% in 2014. Crude oil prices made a big leap forward today, but is it going to last? Investors everywhere are looking for answers. Obviously, there’s no replacement for the advice of a certified financial planner, but the six investing ideas below should give you some food for thought.

Got Glut?

Similar to oil, natural gas prices have also moved from bad to worse. Despite prices having recently hit a 16-year low, worries persist that warm weather and excess supply could suppress prices in the short term.

According to a recent article in the Wall Street Journal, this year’s strong El Niño system suppressed demand for heating fuel while massive production pushed supply to an all-time high.

Balanced Attack

2015 wasn’t a boon for equities overall, and Goldman Sachs expects the S&P 500 to “tread water” in 2016. The Federal Reserve’s first interest rate hike in 9 years could signal a rising rate environment, and Goldman suggested investing in companies with robust balance sheets as a result.

A strong American dollar, caused partly by tightened rates domestically and weakened rates in Europe and Japan, may help mega-cap stocks with high U.S. sales trump those with more international sales.

Stay Connected

According to PriceWaterhouseCoopers (PwC), the estimated worldwide market potential for the in-car connectivity industry is $43.7 billion, an impressive figure considering the technology is yet to be adopted on a broad scale. By 2021, PwC predicts the industry will grow to $122 billion.

Automakers are investing large sums in research and development while the massive number of startups entering the industry drives innovation.

Tough Defense

China’s emerging presence as a global military power could signal healthy long-term prospects for defense companies. Both Chinese and Russian aggression will likely provoke calls to the next President to increase construction of more elaborate air, missile, and cyber defense systems, as well as new ships, submarines, and aircraft.

Cashed Out

Americans are moving away from paper currency for years. According to the Federal Reserve, cash is still in 40% of transactions, but it accounts for only 14% of total payments; debit and credit cards represent 42% of transactions and 34% of the value of total payments.

The Increasing use of mobile and electronic payment methods including Apple Pay, Google Wallet, Venmo, Paypal and others are grabbing a growing market share.

Ratcheting Rates

After a seven-year run of near-zero interest rates, the Fed has implied further rate hikes are on the way. Experts’ projections have the Fed Fund rate rising to 1.375% by year-end, 2.375% by the end of 2017, and 3.25 the year following. However, keep an eye on discrepancies between the Fed’s forecasts and actual economy growth.

Financial Planning with OptiFour Integrated Wealth Management

OptiFour Integrated Wealth Management has been providing financial planning in the Washington, D.C. metro area for over 25 years. For more information on our many services, please visit our homepage.