Dow Jones welcomes in 2015 with the jitters

After hitting clearing the 18,000 mark in December, the Dow Jones is having a few nervous moments in the first week of January 2015.

Energy had a lot to do with it. Oil prices fell almost $2 per barrel on January 5th, with West Texas Intermediate falling below the $51 per-barrel mark. That pushed down the Dow energy components ExxonMobil and Chevron, with respective losses of about 3% and 4%.

Other factors are also beginning to create uncertainty. According to the Motley Fool,

After having climbed steadily since the financial crisis, the net negative credit balances that investors have in their brokerage accounts have reached record levels and are now starting to raise concerns about overuse of margin debt among ordinary account holders. Moreover, with potential short-term interest-rate hikes coming as soon as later this year, paying interest on margin debt could soon become a much bigger burden.

According to Independent Living’s senior economics editor, Seth Van Brocklin, it’s time to take a fresh perspective on investing opportunities and strategies. Don’t assume that what worked well as an investment strategy last year will work this year. By the same token, investments that failed to pay off in 2014 could be the shining stars of 2015.

Some trends are clearly unsustainable. Oil and commodity prices won’t continue falling forever. The dollar and bonds won’t continue rising forever. Pinpointing a future inflection point for trend
changes in each of these asset classes is impossible. But at some point this year a number of significant trend changes may take place. Whether the U.S. stock market’s major uptrend can continue in 2015 remains to be seen. Another year of modest gains or a final blow-off phase to the major bull market that began in 2009 are both plausible scenarios. But valuation indicators are flashing warning signs about expected returns for long-term investors.

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