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4th Quarter 2015 Commentary

4th Quarter 2015 Commentary

The 4th quarter of 2015 began generally upbeat following the 3rd quarter market decline.  Most domestic business sectors were positive through November, with the exception of the energy sector which remained weak. December was weak amid a renewed decline in crude oil prices, the S&P 500 managed to return 1.4% for the year – marking the lowest annual return for the index since 2008.  The SignalPoint MRI closed the year in slightly bullish territory with a lower suggested cash reserves for diversified equity portfolios.

Heavy tax related selling further depressed Emerging and Latin American markets as the year came to a close. Additional uncertainty grew as to how China’s slowing economy would affect the global equity markets and the bi-polar speculation as to the economic effect of lower crude oil prices continued.

The Federal Reserve Banking Committee (Fed) followed through on its well forecasted hike of interest rates by raising the short term rate .25% as the 4th quarter of 2015 closed. This was the first rate increase since 2006 and the Fed’s stated goal was to increase rates further during the calendar year of 2016. As expected, the components in our income strategies reflected some interest rate sensitivity, but it was not as dramatic as some had expected. The markets seemed to have had plenty of time to prepare for the beginning of the shift in Fed policy. Still, our income portfolios showed minor losses as the year closed.

The SignalPoint investment process was driven to increase holdings through buying in overseas equity sectors, but the domestic markets hovered just above our buy targets through the 4th quarter of 2015. A few of the components of our income portfolios also triggered some accumulation of shares. This will help those portfolios going forward by shifting money from cash to the more reasonable yields of the income components.

Overall 2015 proved to be the most challenging year for both the SignalPoint equity and income strategies since 2011. Even so, overall portfolio values remained relatively steady despite the year’s challenges.  As we head into 2016 the SignalPoint MRI continues its bullish signal indicating that there appears to be a greater upside potential than downside risk for 2016. Both the income and equity portfolios continue to have healthy reserves of cash while we seek to prudently add to portfolio positions when price targets are met.

We welcome feedback from our Clients. Please feel free to contact us should you have questions relative to portfolio performance or our view of market risk.

Thomas M. Veale

Chief Investment Officer

SignalPoint Asset Management, LLC

SignalPoint Asset Management, LLC
Office Hours: 8:00 am—4:30 pm Monday—Friday
1201 E. Walnut Street, Springfield, MO 65802
Phone: 877.769.9980