Goodbye, 2015. Hello, 2016.

sp500 2011sp500 2015

Chart Source:

For investors, 2015 felt an awful lot like 2011.  The charts above show the S&P 500 index (large cap US equities) in orange and I think you’ll be able to see the similarities.  Though the returns during these years were nearly identical, the reason behind them is not.  In August of 2011, the US credit rating was downgraded, which caused a massive equity sell off and a rally in treasuries (ironic, don’t you think?).  The selloff in 2015 was sparked by a slowing China, the Fed raising interest rates, and plummeting oil prices.  Needless to say it has been a roller coaster year.   I read this morning that 2015 was the worst year since 2008 for the S&P 500, but was the best performing asset class beating out bonds, Treasuries, and commodities (Source: Societe Generale).  These paltry returns made it the worst year for finding returns in any asset class dating back to 1937 (Source: Societe Generale).  What’s an investor to do?

Though diversification did little to help in 2015 (nearly everything was down), all hope was not lost.  I expect, based on valuations and economic data that the US will continue to plug along at a slow, but steady rate.  I also think given the quantitative easing and loose monetary policy in Europe, we could see some positive returns for developed foreign investments.  China is going to be a difficult market to be invested in.  Take today, Monday, January 4th, 2016, for instance.  The Chinese stock market had to be halted after dropping 7% and tripping the “circuit breakers.”  The reason for their mass selloff is the same as it was in August, manufacturing numbers came in weaker than expected, which forecasts a slower growth economy.  This could be the new normal for them, but remember it doesn’t mean that China is stopping altogether.  They are still growing at about 7%, but it’s lower than what we have been accustomed to.  In my opinion, the price of oil will continue to stay low if demand continues to weaken and we are oversupplied.  However, the politics surrounding the oil industry are complex and deep, so anything could happen there.


As 2016 kicks off in a volatile way, keep your goals in mind.  If you’re investing for income, you will have to be careful with interest rate hikes, credit ratings and time horizon.  If you’re investing for growth, you might have to be comfortable with higher short term volatility for less short term gain.  If you’re not sure about your goals, let’s make a plan to help put market returns in perspective.  And if the past is any indicator of the future, after a less than stellar 2011, the S&P 500 rose 13.4% in 2012 (Morningstar).




Carolyn Menker

LPL Wealth Advisor

Williamsburg Financial Group


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. Indexes are unmanaged and cannot be invested into directly.

Economic forecasts set forth may not develop as predicted.


All investing involves risk including loss of principal