7 Major Market Events For 2016 Wrapped Up In A Box: No.5 to No.7

Dear Foolish readers, welcome to the penultimate day of 2016!

2016 has certainly been an eventful year, full of surprises and unexpected outcomes. I thought it’d be interesting to ‘wrap up’ some of the major market events that have happened during the year and present them as a present – one which contains a boxful of investing lessons.

In this article, I’d be looking at three major events (in no order of merit). For the other four, you can check out here. With that, let’s get started!

5. Donald Trump’s win in the US presidential election

In November, the world watched with bated breath as the US went to the polls to vote for its next president. As many of you would have known by now, Donald Trump emerged as the victor.

But in a similar manner to Brexit, Trump’s victory was largely unexpected. You can see this in the chart below, which plotted the odds of a Republican candidate winning the presidential election (Trump was the Republican candidate):


Clearly, political outcomes can be as hard to predict as the stock market. The lesson here? Ignore politics and focus on companies with good long-term economics!

6. The US market climbing to all-time highs

As I mentioned in my discussion of one of the major market events, “2016 began with some big declines in stock markets around the world.” The S&P 500 fell by over 10% from the start of the year to its February low. But today, the S&P500 is near an all-time high, and is 10% higher than where it was at the start of the year.

The lesson here is that we should never try to predict what the market will do over the short-term. Warren Buffett, one of the most successful investors of all time, was wise enough to ignore short-term market fluctuations. We probably should listen to him!

7. Recovery of oil prices

In mid-2014, oil prices were above US$100 per barrel. Back then, no one expected oil prices would end up falling below US$30 by the first-quarter of 2016. When it happened, the situation was so bad that some market commentators were warning that prices could fall to as low as US$20.

But oil prices never did fall that low. In fact, they are today around US$55. So, the doom-and-gloom view clearly did not turn out to be true.

The lesson here is two-fold: Firstly, no one can really know how commodity prices will move; secondly, expectations in financial markets tend to overshoot both on the optimistic as well as pessimistic ends.

So, there you have it. Three major market events that happened in 2016 and the lessons we can learn from them. I’ve shared the link to the other four events earlier, but for convenience’s sake, here it is again.

With that, I wish you a happy 2017!

If you like what you've seen, you can get even more investing insights and analyses from The Motley Fool's weekly investing newsletter Take Stock Singapore. It's FREE, so do check it out here.

Also, like us on Facebook to follow our latest news and articles. The Motley Fool's purpose is to help the world invest, better.

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