The
52 week high, 2134.72 was on May 20th. From that level, there was a 12.5% drop in August to 1867.01, followed by a 13% rally to where
we sit today, 2% below the spring highs.
Much
ado about nothing except for those who own Energy and Utilities on
the negative side or growth oriented Consumer Staples or Technology
stocks on the plus side. The best returns came from growth stocks
with accelerating revenue trends namely: AMZN, ATVI, GOOG,
PANW, NVDA, and NFLX to name a few.
More
than half of the index components are down year to date.
Bond
indices are up 0.88% in 2015. Commodities and commodity equities are
down with oil dropping 10% in November alone.
The
U.S. dollar has appreciated 25% since early last year versus a
basket of currencies, making earnings reported in U.S. currency
harder to come by despite growing GDP up 2.3% in the 3rd Quarter.
The
terrorist attack in Paris combined with other attacks abroad lead
some investors to believe the U.S. is a safe haven for investor
funds. All the more so with the Fed close to hiking interest rates
for the first time in many years at the December 15-16 meeting.
For
U.S. investors with overseas exposure the only positive returns
came from Japan +10% and Russia +14% YTD.
The
long list of losers include: Brazil -38%, Canada-19%,
Large Cap
China
-10%, India -9%, Germany -0.6%, Mexico -10%, and UK-4.8%.
It
has been difficult to achieve positive returns after costs.
Don’t
forget we still have negative interest rates in European countries
and more easing to come in the Euro zone post the terror attacks in
Paris.
In
sum, in order to achieve positive returns, you must own growth stocks
with accelerating revenues that can overcome headwinds from an
appreciating U.S. dollar. You must be willing to own and hold high
P/E and high beta shares that can fluctuate violently at times.
Without
a significant growth component in your portfolio, investors must
remain content with paltry returns unless cyclical economic activity
picks up in a meaningful way.
Doug
Coppola
John
Coppola
Dec.
1, 2015
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CFA does not accept any responsibility or liability arising from the
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legal, accounting or tax matters was written in connection with the
explanation of the matters described herein & not intended or
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not intended to be used and cannot be used for the purpose of
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transaction or
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