Friday, January 1, 2016

My IRA's and the Overall Stock Market's 2015 Results ... Markets Went Nowhere But My IRA Did Well

Since I'm always recommending that individuals become long term investors in dividend paying blue chip stocks, and preferably at an early age (either through low cost S&P 500 index funds or directly by owning individual stocks), a brief summary follows with respect to investment results in 2015, both in the broader market as well as in my personal IRA account.

In general, after several years of double digit percentage gains, stocks were flat to down last year. Of course, one year doesn't mean much by itself, and should never be seen as an indicator of future years.

However, markets do tend to show solid increases in most years and last year's flattish performance provides a good backdrop for meaningful gains in 2016. At least that's my admittedly contrarian view. See After a Tumultuous 2015, Investors Have Low Expectations for Markets.

So with that warning and disclaimer firmly in mind, let's review what happened in 2015.

Stocks were flat to down for the year.

Bonds decreased in value as interest rates began to increase, albeit slightly.

Energy and other commodities fell heavily in price.

Yet my personal nearly all stock IRA portfolio gained 6.7% for the year.

How did this happen?

First, I'm a long term oriented DIY investor in blue chip dividend paying stocks That saves me ~1% annually since I don't pay financial advisers to manage my account.

Second, I avoided the big fall in both energy and commodity investments during 2015. Abstention works.

Third, as is my custom and practice, I also avoided bonds and gold.

Fourth, I overweighted selected pharmaceuticals, technology stocks, financials and a few select industrials (GE, Boeing and Honeywell) and avoided the rest of the big industrials due to the strong dollar and weak overseas economies, including China.

Later in the year, I added some blue chip consumer stocks because of the low energy prices and the positive effects that will have over time for consumer spending.

And I don't typically invest in telecommunications or utility stocks.

And that's about it for 2015.

Now it's on to 2016 and beyond.

Oh, I almost forgot. Happy New Year!

Thanks. Bob.

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