STATE OF THE UNION 2016

1

investopedia’s state of the unionOVERVIEW

2016 TAKEAWAYS:

• Oil is oversold

• Massive boomer Social

Security fear

• Minimal interest rate

increases in 2016

• Trump won’t win

2

investopedia’s state of the unionCOMMODITIES

THE BIG STORY: OIL

• Has oil hit a bottom?

• Should investors start

seeking opportunities in

commodities?

• What’s the optimal strategy

going forward?

3

2016 TAKEAWAYS:

As panic over oil’s collapse subsides, look for a bottom in the market.

investopedia’s state of the unionRETIREMENT

4

INVESTOPEDIA USERS’ INTEREST IN OIL PRICE OF OIL

Source: Investopedia Internal Data, US. Energy Information Administration.

Investor Fear Peaks

Oil Prices Start to

Slide

Oil Prices Stabilize

2014 20150

20

40

60

80

100

120

investopedia’s state of the unionCOMMODITIES

INVESTOPEDIA USERS’ INTEREST IN COMMODITY ETFs

Note: Data based on 28 articles. Source: Investopedia Internal Data.

ETFs as a Hedge Against

Risk Peak

2016 TAKEAWAYS:

Interest in commodity

ETFs increases as a hedge

against risk.

5

investopedia’s state of the unionRETIREMENT

THE BIG STORY: UNCERTAINTY

• Congress has changed two

rules around Social Security

• Baby boomers are anxious

about Social Security benefits

• Millennials’ interest in Social

Security is very low

6

investopedia’s state of the unionRETIREMENT

INVESTOPEDIA USERS’ INTEREST IN SOCIAL SECURITY RETIREMENT BENEFITS

Note: Data based on 21 articles. Source: Investopedia Internal Data.

File and Suspend Rule Change

2016 TAKEAWAYS:

• Restrictions around

Social Security

benefits increase.

• Look for increased

interest from

millennials around

alternative retirement

strategies.

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2016 TAKEAWAYS:

Readers older than 55 make up 9.5% of Investopedia readers, but they drove 85% of traffic around Social

Security benefits:

investopedia’s state of the unionRETIREMENT

A25-34 A35-44 A45-54 A55-64 A65+

8

INVESTOPEDIA USERS’ INTEREST IN SOCIAL SECURITY

BENEFITS BY AGE

A18-24 A25-34 A35-44 A45-54 A55-64 A65+

INVESTOPEDIA AUDIENCE BREAKDOWN

Source: Investopedia Internal Data.

investopedia’s state of the unionRETIREMENT

INVESTOPEDIA USERS’ INTEREST IN RETIREMENT CONTENT BY AGE

9Note: Data based on 21 articles. Source: Investopedia Internal Data.

2016 TAKEAWAYS:

• Readers under 34 are

very concerned about

retirement, but not

about Social Security.

• Interest in retirement

content from students

and recent grads has

doubled since 2014.

investopedia’s state of the unionINTEREST RATES

THE BIG STORY: THE FED

• Throughout 2015, the world

nervously anticipated a raise

in interest rates for the first

time in 10 years

• Based on the modest rate

hike, general investor

sentiment predicts modest

and infrequent hikes in 2016

10

11

investopedia’s state of the unionINTEREST RATES

0

1

2

3

4

5

6

Source: Board of Governors of the Federal Reserve System (US).

HISTORICAL INTEREST RATES

%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

investopedia’s state of the unionINTEREST RATES

INVESTOPEDIA USERS’ INTEREST IN BONDS RELATIVE TO STOCKS

2016 TAKEAWAYS:

Our readers’ lack of

interest in bonds suggests

minimal interest rate hikes

in 2016.

Note: Data based on 14 articles. Source: Investopedia Internal Data. 12

Bernanke Taper Tantrum

investopedia’s state of the unionPOLITICS

THE BIG STORY: ANXIETY

• Investopedia created a

“Anxiety Index” by aggregating

terms that historically spike

during times of economic

uncertainty and crisis

13

investopedia’s state of the unionPOLITICS

WHAT IS THE ANXIETY INDEX?

• Investopedia terms that signify

investor anxiety – The Unlucky 13 –

can be used to gauge market

sentiment .

• According to a paper published by

the Economists Funke, Schularick,

and Trebesch,* there is a direct

correlation between financial crises

and political movements, specifically

far right parties benefit from financial

insecurity.

THE 13 ANXIETY INDEX TERMS:

• Short

• Default

• Default Risk

• Default Probability

• Incipient Default

• Bankruptcy

• Discharge in Bankruptcy

• Bankruptcy Risk

• Technical Bankruptcy

• Insolvency

• Chapter 11

• Liquidation

• Solvency

*Article URL: http://www.voxeu.org/article/political-aftermath-financial-crises-going-extremes 14

investopedia’s state of the unionPOLITICS

ANXIETY INDEX

2016 TAKEAWAYS:

According to the Anxiety

Index, there isn’t enough

financial uncertainty for

Trump to win the 2016

election.

Peak of Financial Crisis

Tea Party Insurgents Take

Congress

European Sovereign Debt

Crisis

Greek New Democracy Party

Wins Election

15Source: Investopedia Internal Data. CBOE Market Statistics.

16

investopedia’s state of the unionPOLITICS

Peak of Financial Crisis

European Sovereign Debt

Crisis

CBOE VIX INDEX

2007 2008 2009 2010 2011 2012 2013 2014 2015

S&P500Drops 10% Over

Two Days

2016

Chinese Stock Panic Hits US Stocks

Source: CBOE Market Statistics.

Anxiety Index CBOE VIX

+196%

17

investopedia’s state of the unionPOLITICS

Source: Investopedia Internal Data. CBOE Market Statistics.

ANXIETY INDEX & CBOE VIX INDEX

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

+41% +20%+19%

+72%+70%

2016 TAKEAWAYS:

Investopedia's Anxiety Index

routinely peaks one month

prior to the CBOE VIX Index,

predicting upticks in market

volatility.

investopedia’s state of the unionIN REVIEW

2016 TAKEAWAYS:

• Speculative interest in oil has dropped

70% since its peak at the start of 2015

• Students and recent grads have shown

100% increase in interest in retirement

since the beginning of 2015

• Interest in bonds has decreased almost

50% since 2013

• The Anxiety Index is 30% lower than it was

in 2011, before the elections

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THANK YOU

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