5 Graphs that Explain Financial Markets in 2016

Financial markets in 2016 were characterized by dramatic reactions to political events, particularly Britain’s vote in June to leave the European Union and the American election in November. Yet despite these shocks and a stock market swoon at the start of the year, 2016 ended up being a very good year for most investors. Those with higher allocations to riskier assets did especially well as high yield bonds, US stocks, emerging market stocks, and commodities all posted returns of more than 12%. Here are 5 graphs that explain the key movements in financial markets during the year:

4 Graphs that Explain Financial Markets in Q3

Despite political turmoil in a number of countries, a tumultuous US presidential election campaign, and uncertainty in the aftermath of the “Brexit” vote in June, most asset classes posted positive returns in the third quarter. Stock markets around the world rose while high yield bonds continued their strong performance so far this year. Here are 4 graphs that explain the key movements in financial markets during the most recent quarter:

5 Graphs that Explain Financial Markets in Q2

The second quarter of 2016 had its fair share of financial drama. British voters narrowly voted to have their country leave the European Union, throwing financial markets into a state of hysteria. In the US, a weak May jobs report fanned fears of a recession. Yet the quarter ended up being a good one for most investors as both stocks and bonds recorded gains. Here are 5 graphs that explain the key movements in financial markets during the second quarter.

How Investors Should Think About the Brexit Vote

On June 23rd British voters will decide whether their country should remain a member of the European Union. A vote in favor of leaving the EU—commonly called “Brexit”—would alter European economics and politics. It would also affect investors, although the exact implications of Brexit are shrouded in uncertainty.

The Recent Struggles of India’s Stock Market

Optimistic investors had hoped that Narendra Modi, who became India’s Prime Minister with his party’s election victory in May 2014, would jump-start India’s stock market. From early 2014, when Modi’s Bharatiya Janata Party became the overwhelming favorite to win the election, India’s stock market gained almost 40% during the subsequent year. Over the past 12 months, however, Indian stocks have drifted back down, losing almost 15% of their value. Does Modi still have a shot at reviving India’s stock market?

Don’t Think About Your 401(k) in Isolation

401(k) accounts can seem a bit strange. Unlike most other financial accounts where you can invest your money, your 401(k) account is tied to the company you work for. You can’t move your 401(k) account to a different financial institution (at least not while you’re still working for same employer) and (like some other types of retirement accounts) you generally can’t withdraw money from a 401(k) before the age of 59 ½ without incurring penalties. Yet just because your 401(k) account is different from other accounts doesn’t mean you should think about it in isolation.

Understanding Facebook’s Stock Restructuring

This week Facebook announced that it will introduce a new version (or “class”) of its stock. It will essentially be doing a 3-for-1 split, with Facebook stockholders getting two shares of the new version for every one share of the old version that they own. Why would Facebook go through these kinds of financial contortions? And what are the implications for investors?

Is the Technology Sector Overvalued?

The technology sector has become a more significant part of the US stock market in recent years. It’s now the largest sector in the S&P 500 index, and four out of the ten biggest companies by market value—Apple, Microsoft, Facebook, and Alphabet (the parent company of Google)—are technology companies. A fifth, Amazon.com, is a retail/technology hybrid. For some investors this growth brings back painful memories of the dot-com bubble of the late 1990’s and the subsequent crash. Are technology stocks once again overvalued?

The Benefits and Drawbacks of Market Tranquility

After a bumpy start to 2016, the stock market seems to have calmed down. While the S&P 500 index of large US stocks moved by more than 1% on almost 60% of the trading days in the first two months of the year, it did so only three times in March. Meanwhile the CBOE Volatility Index (often called the “VIX”), a measure of expected stock market volatility, has plunged to well below its long-term average of about 20. For investors, this tranquility provides both an opportunity and a potential pitfall.

How to Think About the Biggest Risks

Last week the Economist Intelligence Unit, the research division of the company that owns the magazine The Economist, released the latest version of its global risk assessment. The list made headlines because it included a certain former reality TV star and Republican presidential candidate among the “top 10 global risks” alongside things like terrorism and a Chinese economic collapse. But beyond the fact that attaching the words “Donald” and “Trump” to anything seems to make it newsworthy, what can investors learn from this list of global risks?