Much like 2011, last year was hardly remarkable for the markets. The S&P 500 wound up closing at about 0.75% less than where it started at the beginning of 2015 (+1.38% total return - including dividends). Overall, the global market struggled but there were a few exceptions. Notably, the Consumer Discretionary, Health Care and Technology stocks all finished in the green. The mainstays of old were among the worst performers, including the Financial, Utility and Material sectors. The energy sector was the biggest loser - finishing negative at 23% (oil prices bottoming-out in the low $30’s contributed to this drop).
An extremely volatile market during the third and fourth quarters plagued investors much in the same vein as 2011. Due to so many sectors of the market displaying this volatility, diversified investment practices and value buys did not put many folks in positive territory in 2015. However, it is the opinion of this firm that many of these investments have yet to come to fruition. Again, much like 2011, we believe investors who are patient will be rewarded.
Listed below are 2015 year-end returns for the five major indexes:
BarCap US Agg Bond + 0.55% S&P 500 + 1.38% Russell 2000 - 4.41% MSCI EAFE (Europe) - 0.81% MSCI EM (Emerging Markets) - 14.92%
Two events were responsible for the volatility in Q3; fear of global sluggishness (especially in China), and uncertainty of the Federal Reserve’s decision on a rate hike. However, we perceive the recent pullback as a pause in the ongoing bull market and that we will very likely realize the DOW reaching 20,000 at some point in 2016. We see clear opportunities in the Technology, Health, Financials, Energy, Europe and the Emerging Markets being presented. Patience is key here - many of the investments made in 2015 will begin to show their true worth in 2016.
The S&P 500, despite being the leader for six years, lagged behind other major global indices halfway through 2015, but once volatility in China picked up it again regained its place at the top. Sloy, Dahl & Holst almost always keeps the majority of its equity positions within the U.S., however, we are looking for new leadership from international markets in the coming years. Something to remember - the S&P 500 was negative for a decade, from 2000 – 2010. Global diversification is critical over the long-term.
As always, please feel free to contact us directly if there’s anything we can do to help. We look forward to assisting you with any of your financial needs in 2016!