Tahoe-Truckee Market Beat: 2016 — year in review
The year 2016 was a pretty good one for stocks. The benchmark S&P 500 index closed at 2,238.83 and was up +9.54% for the year, which was more than double its average annual return of +4.67% for the last ten years and below its five year average annual return of +12.23%.
The Dow Jones Industrial Average gained +13.42% and has flirted with the 20,000 threshold several times. Hopefully we’ll see the 20,000 level soon.
The Dow has had a five year average annual return of +10.10% and a ten year average of +4.72%. The Dow closed the year at 19,62.60. 2016 was the best year for the Dow in the last three years.
The NASDAQ Composite grew by +7.50%, below both its five and ten year average of +15.62% and +8.34% respectively.
The best performing sectors of the market were Energy with a +23.7% return and Financials with a gain of + 20.1%.
The worst performing sector was Healthcare, with a loss of minus -4.4%. The Healthcare sector was the only one that had a negative return for the year. The new Real Estate sector barely eked out a positive return with a tiny gain of +0.01%.
Gold gained just over +8% and closed at $1,152 per ounce, which wasn’t too bad a gain; however it did close well below its high for the year of $1,387.10.
Oil gained +45.3% and closed at $53.89 per barrel of West Texas Intermediate crude. Oil hit a low of $35.10 during the year.
It wasn’t a very good year for bonds as interest rates rose last year. The S&P U.S. Aggregate Bond Index had a total return of +2.33%.
The yield on the benchmark ten year Treasury bond finished the year at 2.45%. It was as low as 1.32% during the month of June and the yield topped out at 2.64% in December during the post election bond sell off.
It was also a strong year for the U.S. Dollar relative to other currencies; the ICE U.S. Dollar Index gained +4.0%.
Globally, Brazil had the best performing stock market, the Brazil Bovespa gained +68.9%. Russia was second, the Russia MICEX Index climbed +51.0% over the year.
It will be interesting to see what 2017 has in store for the markets. Expectations seem to be fairly high. I hope that all of you have a great year ahead.
Kenneth Roberts is a Truckee-based Registered Investment Advisor. Information is at his blog at http://www.sellacalloption.com or 775-657-8065. The mention of securities should not be considered an offer to sell or solicitation to buy investments mentioned. Consult your investment professional to understand the risks and/or how the purchase or sale of these investments may be implemented to meet your investment goals. Past performance is no guarantee of future results.
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