As the year draws to a close, I wanted to go over some of the high (and low) points.  The bottom line is that 2015 was a tough year to be a diversified investor:

• Commodities and the energy sector are down sharply due to oil dropping by about 32% year to date

• International emerging markets fell due to a rising dollar coupled with a slowdown in China

• High yield bonds dropped, especially this month due to a default by three high yield bond funds, directly related to credit defaults in the energy sector. Not all high yield bonds are actually impacted, but when there is an issue with a sector, everything declines

• Bonds declined simply because interest rates went up; this is the way they work, but in light of everything else it was yet another asset class which we had to see go down

There were positives:

• Growth stocks, be they small, medium, or large cap, far outpaced value stocks

• Sectors which benefit from low gas prices, such as transportation, consumer discretionary, and consumer staples, were mostly up

• Jobless claims and unemployment are, as of last week, both back down to levels not seen since the financial crisis.

• Building permits, a leading indicator, have been on a gradual but continual rise, doubling since 2009, but still about half of what they were in 2005.

What is the lesson?  Stay diversified!  In the summer, there were a lot of investors making bets on oil going back up; it has in fact gone down further.  Similarly, going to cash is NOT a diversification.

On that note, the chart below, which I like to call Time Not Timing, shows what happened over the last 25 years had someone missed out on the best days, even 10 days, by being out of the market: performance is significantly impacted.  Since we don’t have a crystal ball, staying invested to your proper risk tolerance and for the long term is the best way to have the opportunity to see your nest egg beat inflation.

Happy New Year!  Here’s to a better year in 2016!