Lots of investors have been very disappointed this year. The financial media keep telling us that the markets, although less than stellar, are intact and poised for future gains. Few investors see that in their own portfolios. The reality is that if your portfolio is concentrated a few mega cap stocks that have done well you are doing just fine. You can count those stocks on the fingers of one hand. Those few stocks represent about half the value of the S&P 500 and NASDAQ indices because the indices are “cap weighted”. If you weight the stocks equally, they tell a very different story. By the end of last week, an equally weighted index of the stocks in the S&P 500 had given back all of the gains of 2013, 2014 and 2015. The bond market tells a similar story Long term TBonds have managed to tread water in 2015, but those who opted for “credit” products have had their share of challenges. Credit risk that paid big dividends a few years ago is imploding. It seems a bit baffling, until you realize the chickens we warned about, came home to roost. The opportunities to buy assets at deep discounts are finally starting to appear. By this time next year the opportunities we have patiently waited for will be abundant.
Merry Christmas
Clyde Kendzierski
FSG LLC
© FSG LLC
