Another anomaly in the 2015 versus 2011 performance is the asymmetry of the underlying Sector returns.
Whereas both years saw a spread of about 32% from the top to bottom performing sectors, 2015 saw a much greater skew towards the negative. Additionally, whereas 2011 sector performance had more of an interest rate correlation (with Utilities leading and Financials lagging), this year’s performance was much more commodity correlated, with Materials and Energy both at the bottom following weak performance, particularly in oil.
So where does this lead us into 2016? Following 2011’s more paltry returns, the market had three very solid years thereafter. So maybe this year was just a pause in the continuing bull market. However, in 2007 the market also saw slimmer returns with the S&P 500 at +5.49%. What followed was the unforgettable 2008 in which the S&P 500 returns were -37%. So maybe this pause is actually a market top. Additionally, with the end of the Federal Reserve’s stimulus (and some say propping up of the market), the lack of a backstop could be a negative. Only time will tell where the market goes from here.
Clayton Fresk is a Portfolio Manager at Stadion Money Management, a participant in the ETF Strategist Channel.
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