Running in Place in 2015
Friday, January 15, 2016
Can it be that 2015 is already over? There are some years in which it can be difficult to encapsulate all the events that occurred during the year in a single client letter. 2015 was not one of those years. In terms of portfolio returns, frankly, not much happened. Clients who did not make meaningful contributions or withdrawals to their portfolios ended the year essentially where they began.
- Not much worked in 2015, as most of the major asset classes posted returns near the flat line. For the most part, clients who did not make meaningful contributions or withdrawals to their portfolios ended the year essentially where they began.
- For the first time since 2008, the S&P 500 Index declined for the year by falling 0.7% on a price return, though dividends pushed investors’ total return to a positive 1.4%. The sideways nature of 2015 can best be understood in the fact that the S&P 500 crossed the flat line a record 30 times this year.
- Broadly speaking, the collective failure to grow earnings gave no compelling reason for the market to move higher. Additionally,with valuations on the S&P 500 Index already above their five and ten-year averages, it is easy to see why the market remained stuck in neutral during 2015.
- Equity market leadership was extremely narrow in 2015, asevidenced by the fact that the average stock in the S&P 500Index was down 4%. Strong returns by a couple of expensive large cap growth names masked the overall weakness of the broad market.
- For the first time since 2006, the Fed raised the federal fundsrate a quarter of a percent. Fed issues worth monitoring in 2016 will be at what pace they continue interest rate increases, along with the divergence in policy between the Fed and other central banks around the world.
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