In 2015, the stock market gave investors a reason to bite their nails. The year started on a calm note, but that calm didn’t last long. The market hit a wall in August and a mini-crash made investors’ move money around like monopoly pieces that wanted to pass “Go,” and restart the game. Well, the game did restart in November, and the market ended on an upbeat note, but analysts still think that upbeat note is a short-lived event.
Jim Dondero and Mark Okada started Highland Capital Management in 1993. Highland Capital has blossomed into one of the top hedge fund investors in the country. As of last year, the company has more than $15 billion in assets under management, and Dondero says that number will grow in 2016 thanks to his recent investments in healthcare, energy and information technology.
Highland Capital Management has been successful because of Jim Dondero’s ability to read the stock market. He says when investors are worried about the market the risk pendulum starts to swing the other way, and the market adjusts to the counter swing. In other words, the market goes up because investors don’t act. The lack of direction and the inability to make a decision are an investor enemies. But Dondero knows how to handle those enemies. He acts. He buys leading growth companies and waits for the market to adjust.
Investors and market analysts are divided when it comes to predicting what the stock market will do in 2016. Many analysts say wait and see while investors like Dondero that have billions of assets under management say understand the history of investing and don’t worry about the ups and downs that much. Investors should look for companies that have a history of growth in good times and in bad times. Once they are identified, invest in those companies. Then wait and see where the market is going. According to a recent article on Forbes.com that strategy makes sense.