Weekly Commentary, 12/28/15 – 12/31/15
There were numerous similarities between the last week of the year and the entire year. In the end, there was very little price movement but behind the scenes there were periods of extreme volatility. The U.S. equity markets finished the week marginally lower in thin holiday trading. However, hidden behind the lackluster performance was some intraweek volatility as the markets were impacted by the movements in oil prices.
As we close the books on 2015, the S&P 500 Index finished with a marginal loss of about 0.7% and the Dow Jones Index lost about 2.2% for the year. Considering the approximately 2% for dividends that were paid along the way, the year was anything but exciting. But behind what seems like a year to forget there were some fireworks throughout. The Federal Reserve raised rates for the first time in nearly 10 years with global central banks bent on divergent paths. Collapsing commodity prices rippled around the globe from China to the domestic high yield markets. The trade weighted U.S. Dollar strengthened over 10% pressuring emerging markets. Alongside these fundamental issues, the market technicals measuring breadth were flashing warning signals for the majority of the year. The global fundamental macro issues and the technical issues confronting the markets in 2015 will not vanish as we turn the calendar in 2016. This is the time of year when Wall Street pundits are publishing their forecasts and recommendations for 2016. The one forecast we are comfortable making is that 2016 will not be like 2015. Only time will calm the current headwinds but others will undoubtedly appear. We will continue to manage our portfolios with our time-tested strategies that attempt to remove the human emotion and subjectivity found in the investment decision making process with a goal of minimizing volatility along the journey.
The Stadion Managed Account Risk objectives are managed using a “core/satellite (Flex)” approach. The core positions will comprise 40-60% of the portfolio and are invested in equity, fixed income and money market instruments with the strategic allocation becoming more risk averse as the risk tolerance of each fund changes. In allocating the objective’s Flex assets the remaining 40-60% of each portfolio, Stadion uses a proprietary, rules based weight of the evidence model. The Flex portion of the portfolios remain in their most defensive position per the risk objective.
Past performance is no guarantee of future results. Investments are subject to risk, and any of Stadion’s investment strategies may lose money. The investment strategies presented are not appropriate for every investor and financial advisors should review the terms and conditions and risks involved. Stadion’s actively managed portfolios may underperform during bull markets. Some information contained herein was prepared by or obtained from sources that Stadion believes to be reliable. There is no assurance that any of the target prices or other forward-looking statements mentioned will be attained. Any market prices are only indications of market values and are subject to change. The S&P 500 Index is the Standard & Poor’s Composite Index of 500 stocks and is a widely recognized, unmanaged index of common stock price. The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ. It is not possible to invest directly in indexes (like the S&P 500) which are unmanaged and do not incur fees and charges. The Sharpe ratio measures the excess return per unit of deviation, or risk. Any references to specific securities or market indexes are for informational purposes only. They are not intended as specific investment advice and should not be relied on for making investment decisions.
Past Performance is no guarantee of future results. Investments are subject to risk, and any of Stadion's investment strategies may lose money.