The first quarter of 2016 tested investors' mental toughness, but the earnings outlook presents new risks as the second quarter begins. Bobbi Rebell reports.
The first quarter of 2016 is wrapping up just about where it started for investors, but behind the closing numbers lies a turbulence that made a mark with investors. The sharp drop of more than ten percent at the start of the year tested the mental toughness of many. Tony Robbins, the chief of investor psychology at wealth management firm Creative Planning offers this perspective: (SOUNDBITE) TONY ROBBINS, BEST-SELLING AUTHOR AND CHIEF OF INVESTOR PSYCHOLOGY, CREATIVE PLANNING (ENGLISH) SAYING: "In the last thirty years there have been thirty corrections. The average correction per year has been 14.2 percent . It's between 13 and 14 and a half, to be accurate. And it usually lasts two months. So, this is not new. Whenever we do this, now this one was extremely severe right up front. The worst January ever. But reacting to the environment, trying to predict the market no one is right long term." The stock market performance is only part of that story. Another key part - how corporate America performed in the first quarter will likely influence how the financial markets perform in the second quarter. And that remains a real forward-looking risk according to O'Shares Chairman Kevin O'Leary: (SOUNDBITE) KEVIN O'LEARY, CHAIRMAN, O'SHARES (ENGLISH) SAYING: "I expect to see flattish earnings. Consumer cyclicals probably going to continue to lead the pack. They are doing very very well. Energy has had a big recovery. Anywhere from ten to 15 percent on those names. You know, I look at it now, and say to myself let's not get too excited about earnings. Let's just make sure we don't have massive misses." " O'Leary is relatively optimistic. According to Thomson Reuters, earnings for the first quarter of 2016 are expected to be down seven percent versus a year ago. That would be the worst drop since 2009.