The world has gone through some major changes over the last seven years. The stock market went from a meltdown to a surging rocket that produced great results for investors that were willing to wait. Waiting is a prerequisite in the stock market. Waiting, studying and reacting are key ingredients in successful investing. The news is also helpful, but not always. The news can cause the market to move in the wrong direction one day, and then catapult it in the other direction the next day. The fact is, the stock market is alive, and it functions by its own rules. Humans created it, but the market has a life of its own and investors that have lost millions have discovered that fact the hard way.
, the CEO of Highland Capital Management is not one of those investors. Dondero has been investing in stocks for years
, and he has been very successful
. Dallas-based Highland Capital Management is considered a top hedge fund investment firm with billions in assets under management. Dondero and his partner Mark Okada have built the company into a driving force in the investment world. So when Jim Dondero talks about stocks, investors listen
The recent articles about the flat performance of stocks in 2015 have some investors nervous. Certain stock analysts believe 2016 will be a repeat of 2015, but Dondero and other hedge fund managers disagree. The stock performance in 2015 has nothing to do with what will happen to stocks in 2016, according to Dondero and other investors. It’s a New Year for the stock market, and anything can happen.
The first four days of 2016 proved that fact. A news article about Chinese manufacturing dropped the value of tech stocks, but that news wasn’t new. China is in the middle of a transformation, and their manufacturing base is shrinking partly by design. The Chinese are moving to a consumer based economy, and that takes time, according to Dondero.
The stock market doesn’t look back and then react. Stock prices are based on an assortment of circumstances, and none of those circumstances are past events. They all happen in the present. Talk about a flat stock market in 2016 is purely speculation, not fact. Even Forbes.com believes the stock market will produce some excellent returns in 2016. A recent Forbes.com article tells investors to forget about 2015 and focus on what’s happening now.
That’s what the stock market is doing and will continue to do.