Market Review: Q4 2015

The previous year was nearly flat, uneventful, and very similar to  2011, The S&P 500 was basically  flat, finishing approximately 0.75% below where it began in 2015 (+1.38% total return, including dividends).  While there were certainly a few areas of growth  throughout the year, there were many areas of the global markets that failed to improve.  Among the best performing sectors, were Consumer Discretionary, Health Care and Technology; all finishing positive.  Other sectors such as Financials, Utilities and Materials were negative for the year.  The Energy sector performed the worst,  finishing negative more than 23%, as oil prices per barrel slid to the low $30’s.

 

 

With extreme volatility in the third and fourth quarters, for investors this year was challenging.  If you utilize  a diversified portfolio and pursued value, you did not finish in positive territory in 2015.  Too many sectors of the global markets performed negatively.  In our opinion; many of those investment opportunities, however, have simply yet to see their expected returns.  We experienced same scenario  leading into 2012 and those who remained patient were rewarded.

 

Listed below are year-end returns for 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%

 

We believe there are obvious  opportunities within Financials, Technology, Energy, Health, Europe and the Emerging Markets being revealed.  Additionally, we believe it’s very likely that continued patience will be required to have a profitable year in 2016.  It is important to remember good investment opportunities are rarely realized immediately, even if we seek more immediate returns.

 

The S&P 500 has lead the global markets for six years.  While it trailed other major global indices halfway through 2015, it again regained its place at the top once volatility in China increased.  We will almost always have the majority of our equity positions within domestic investments..  However, we’re looking for new leadership from international markets in the future.  Keep in mind; the S&P 500 was negative for a decade, from 2000 – 2010.  Global diversification is essential over the long-term.

 

As always, please feel free to contact us if there’s anything we can do to help.  

Sloy, Dahl & Holst, Inc.