1 Key Investing Point You Should Remember For 2016

As 2015 comes to a close, it is worth remembering a few of the events that have happened in preparation for 2016. Portfolio manager Ben Carlson wrote an interesting ode last week:

“Remember when the end of QE was going to cause an enormous market crash?

Remember when Greece was going to cause a global economic collapse in 2010? And 2011, 2012, 2013, 2014 and 2015?

Remember when oil was going to $250/barrel?

Remember when there was no chance the market was going to bounce back after the 2007-2009 crisis?

Remember these types of predictions the next time you hear a market prognosticator tell you they know what’s going to happen in the future. They don’t.”

Woulda, coulda, shoulda

What makes Carlson’s thoughts interesting is that none of the predicted events above happened despite the convincing arguments made in the past. The Greek impasse this year did not cause a global economic meltdown. The price of crude oil is currently below US$40 per barrel, instead of US$250 per barrel.

It’s not to say that these economic developments have no effects on investors. Lower oil prices have affected the level of capital expenditures within the oil and gas industry. This, in turn, has led to weaker revenue for the likes of rig-builders like Keppel Corporation Limited (SGX: BN4) and SembCorp Marine Ltd (SGX: S51). Subsequently, the share prices of the duo have declined hard this year in response.

But, the fall in oil prices had less or no impact on other companies. The likes of SATS Ltd (SGX: S58) actually saw its share price increase this year on the back of encouraging earning results.

Evidently, one economic event does not quite affect all companies evenly.

Foolish takeaway

When we paint economic events with broad strokes, we may end up throwing out the baby with the bath water. That could mean tossing out stock gainers (like SATS this year) in fear of economic predictions that may or may not happen.

As Carlson alludes to, this key point is worth remembering the next time a market prognosticator steps up with a big economic prediction in 2016 and beyond.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.