Articles In 2015
DATE: January 1, 2016
TO: POINT VIEW CLIENTS
FROM: David G. Dietze, JD, CFA®, CFPTM and Founder and President
2015 Fourth Quarter and Full Year Performance
Q4 was better than Q3 but not enough to avoid the headlines that full year 2015 was the most disappointing since 2008. However, you were still rewarded for getting off the sidelines; when you factor in dividends, the S&P’s 2015 1.38% return was more than 100 times greater than money markets or what most are getting at the bank. Still, the average individual S&P stock was down almost 4%. The big winner of the major indices shown below was the Nasdaq. However, when factoring in risk and avoiding taxes, you did best with muni bonds.
MARKET DATA Fourth
S&P 500 (dividends reinvested) 7.05% 1.38% NASDAQ (dividends reinvested) 8.71% 6.96% 60/40 S&P 500 / TX-EXEMPT SECURITIES BLEND 4.88% 2.40% DOW JONES INDUSTRIALS (dividends reinvested) 7.65% 0.19% INTERNATIONAL STOCKS (MSCI EAFE IX ID) 4.37% -3.30% TAXABLE BONDS (Barclay’s 1-3 Yr Gov’t/Credit) -0.36% 0.65% TAX-EXEMPT SECURITIES (Barclay’s Muni Index) 1.51% 3.30% YOUR PORTFOLIO (If fully invested by Point View) See Attached See Attached
- 2015’s seminal event was the late spring collapse of the Chinese stock market, its economy’s rapid deterioration, and its currency’s engineered depreciation. As the world’s second largest economy, its decline served as an offset for better news in the United States.
- The natural response to all this was a headlong rush into the Dollar. It rose nearly 10% in 2015, effectively marking down all assets dealing in foreign currencies, like overseas stocks and US multinationals’ foreign revenues. Meanwhile, commodities, priced in Dollars, faced a similar head wind. The full year 2015 numbers speak for themselves. Oil - 2 - fell 45%, gold 10%, gold mining shares 47%, commodities generally 19%, NYSE energy stocks 25%, Dow Transports 17%, and value stocks 6%.
- The Federal Reserve captivated in 2015, with all eyes on the initiation and extent of the oft promised rate hikes. In December it initiated its first in nearly 10 years. Investors generally are bracing for anywhere from two to four additional hikes in 2016.
- In terms of outperformers, size and exposure to health, social media, and technology generally helped. The largest 100 stocks in both the S&P and the Nasdaq outperformed the broader indices despite most strategists’ belief that smaller would outperform due to less overseas exposure. Dividend strategies came up short: An exchange traded fund focused on dividends, the Ishares Select Dividend ETF (DVY), yielding 3.02%, finished the year, including those dividends, down 2.07%.
The big story in fixed income was that concerns about rising rates were again off the mark, with the yield on the ten year Treasury drifting just a bit higher, to 2.27% from the year’s start, 2.17%. Fixed income investors’ other big risk, credit quality, rose to the fore: High yield, a/k/a junk bonds, slid in 2015 nearly 7%, even including the income, due to its exposure to the struggling energy industry.
PREVAILING YIELDS AS OF:
FIXED INCOME ASSET 12/31/14 03/31/15 06/30/15 09/30/15 12/31/15 US Government 10 Yr. Note 2.17% 1.93% 2.33% 2.06% 2.27% 5-Year Certificate of Deposit 0.85% 0.87% 0.86% 0.86% 0.85% Money Market 0.00% 0.00% 0.01% 0.01% 0.00%
- Q4 was better than Q3 but not enough to avoid the headlines that full year 2015 was the most disappointing since 2008. However, you were still rewarded for getting off the sidelines; when you factor in dividends, the S&P’s 2015 1.38% return was more than 100 times greater than money markets or what most are getting at the bank. Still, the average individual S&P stock was down almost 4%. The big winner of the major indices shown below was the Nasdaq. However, when factoring in risk and avoiding taxes, you did best with muni bonds.
- Markets will walk a tight rope in 2016, but by year end we believe investors will be rewarded for not leaving cash in the mattress. Your biggest positive driver is a better economy, with more working and being paid better. Low energy prices stoke consumers, and little inflation is expected. On the negative side is the health of overseas economies. China, the world’s second largest economy, must be watched for signs of stabilization.
- We believe that the Federal Reserve is unlikely to raise rates so fast as to impair the markets or the economy. While employment has rebounded nicely, a key mandate for it, many economists insist there’s a vast number of drop outs from the labor force, suggesting we be cautious about trumpeting labor market strength. Inflation, the other mandate, seems to be a no show. Meanwhile, the continued rise in the Dollar has the same effect as hiking rates, making Federal Reserve action less compelling.
- The enclosed shows the recent performance of all of your Fidelity accounts (if under management for more than 3 months and fully invested by Point View) and your investment advisory invoice. Fidelity’s 1099 will include all realized gains and losses, along with potentially deductible investment advisory fees, foreign taxes, and ADR fees, and all information about sales. 1099s are issued in late February. Please contact Claire Toth if you or your accountant has any questions.
Don’t Put All of Your Eggs in One Basket – Place a Yoke on Your Employer Stock
Elaine Phipps, 12.24.15.
Did You Set and Forget?
Donna St.Amant, 12.20.15.
A Happy New Year for IRA Holders
Claire Toth, 12.17.15.
Top Ten Picks For 2016
John Petrides, 12.10.15.
The Risks You Aren’t Considering
Claire Toth, 12.09.15.
Planning Alert: File & Suspend Get the Axe
Claire Toth, 11.30.15
Value Stocks: Poised to Outperform?
David Dietze, 11.09.15.
3rd Quarter 2015 Results
Point View Wealth Management's, 10.01.15.
Planning With a Large IRA
Claire Toth, 10.01.15.
ETFs – Ride the Wave or Has the Bubble Burst?
Donna St.Amant, 10.01.15.
Small Cap Stocks: Don’t Sweat the Small Stuff
Elaine Phipps, 10.01.15.
Dividend Yield Hunting
John Petrides, 10.01.15.
Claire Toth, 10.01.15.
Taking Inventory of Municipal Bonds
Elaine Phipps, 8.11.15.
Investing on The Eve of Fed Rate Hikes
David Diezte, 7.25.15.
China Regulators Warn of 'Panic Sentiment'
David Dietze, 7.7.15.
2nd Quarter 2015 Results
Point View Wealth Management's, 7.01.15
Rising Rates and Your Portfolio
Donna St.Amant, 6.26.15.
Taking Inventory of Municipal Bonds
Elaine Phipps, 6.25.15.
Your Key Social Security Moves
Claire Toth, 6.25.15
Sell Discipline: The Art of 20/20 Hindsight
John Petrides, 6.24.15.
Tech Stocks Even Warren Buffett Would Consider
John Petrides, 6.4.15.
5 Takeaways from the Boston Conference
John Petrides, 5.12.15.
1st Quarter 2015 Results
Point View Wealth Management's, 4.1.15.
Soaring Dollar and Your Portfolio: Seven Things to Know
David Dietze, 3.30.15.
Beware the Equity Indexed Annuity
Claire Toth, 3.30.15.
The Bear Market Security Blanket
Elaine Phipps, 3.27.15.
Bonds or Bond funds?
Donna St.Amant, 3.23.15.
Bull Market Celebrates Sixth Birthday: Will It Turn Seven?
David Dietze, 3.12.15.
Time to Take a Bite Out of Apple?
John Petrides, 3.5.15.
Investor Takeaways from Warren Buffett’s Golden Anniversary!
David Dietze, 3.01.15.
“Net Unrealized Appreciation” Untangled
Claire Toth, 2.17.15.
Oil Gloom, Doom and Boom
John Petrides, 1.20.15.