Deep dive of the Fox’s 2015 finances

After the last blog on our investment performance in 2015, I got the following email from Scott, a loyal reader from California who I went to grad school with:

What’s amazing is you were able to increase your beginning-of-year net worth by about 25% this year, and that you did this mostly through savings! With that ability to save you almost don’t need returns on your investment portfolio. Do you have any tips on how you did this, especially in a year when you weren’t working? Does the lower cost of living in the mid-Atlantic deserve much of the credit? Was there a nice upward move in your home value?

Scott, California


So I figured I’d do a bit of a deeper dive to give you some more detail about how things worked out for us.  Who knows, maybe you were wondering the same things that Scott was.


Crazy cash flows

As I have mentioned, 2015 was a crazy year because of me quitting my job and Foxy Lady getting a new job in North Carolina, leading us to move across country.  Those two events were the driving forces behind our fairly crazy finances this year.

When I quit my job we got a cash bolus from Medtronic.  I was able to cash out all my vacation, plus I got a severance.  So even though I officially separated in August, I got paid a lump sum that would be equivalent to me being paid probably through October or November.  That was definitely nice, but money evaporated pretty quickly due to a few things:

  • Our dog had a pretty major surgery that set us back about $5000.
  • We had to get an apartment to live in in Greensboro while we looked for a house. There were deposits and stuff like that which came to a few thousand.
  • All the while, our house in LA didn’t sell so we were still paying a mortgage, utilities, lawn and pool guy, property taxes, and other expenses; all that probably ran to about $5000 per month!!!
  • Also, to get the house in LA ready to sell we had to do a little bit of work. Unfortunately that “little bit” actually became fairly big and probably cost of about $15,000 or so.

I didn’t track the numbers 100%, probably because if would have depressed me, but I figure that all the extra money that came as I left Medtronic was more, but not nearly as much more as I would have hoped, than the amount we had to spend on those “moving expenses”.  Let’s say we came out to the good $20,000 on this.

Once we got to North Carolina, the cost of living is definitely much lower, especially with things like housing.  But because the house in LA didn’t sell, we weren’t really able to take advantage of those lower costs in 2015 because we were paying the double mortgage and all those other costs associated with the LA house.  As it turned out we did sell the LA house in the last days of 2015, so we started 2016 with a clean slate.  Now, we definitely feel the lower cost of living, but that will all be reflected in 2016.

Also, to Scott’s question, we did make a fair amount on our house, but since we didn’t get that money until 2016, it wasn’t reflected in the 2015 numbers.


Saving in boring ways

So to Scott’s main question, how did we save enough money to account for that increase in our net worth?  Because of all the cash flow stuff I mentioned about, we really didn’t have extra money at the end of the month to give to Vanguard to invest.  Really our savings came in two main ways: our 401k accounts and our mortgage.

As I mentioned in the last blog, knowing that I was going to quit my job I really tightened the belt and maxed out my 401k in the first half of the year.  That was $18,000 which is the IRS max, plus probably about $8000 of matching funds from Medtronic.  So that’s about $26,000.

Similarly, Foxy Lady maxed out her 401k, so that was $18,000 plus probably $6000 in matching funds from her two employers over the course of the year.  So that was about $24,000.

Our LA mortgage was about $2300 each month, of which about $1300 was interest.  So that meant that each month $1000 was going to equity.  Over the course of a year, that adds up to $12,000.  In September we bought our North Carolina house.  Our NC mortgage is such that each month we put about $800 towards equity, so that came to about $3000.

Finally, there were those consulting opportunities that fell into our lap a little bit.  This was really found money that we weren’t expecting at all.  Since we made these major life decisions, me quitting my job and then moving to NC for Foxy Lady’s job, with the plan that we’d live off of Foxy Lady’s income we were able to take my consulting income and just bank it.  Net-net, this came to probably about $30,000.

If you add all that up—the money from leaving Medtronic, the 401k stuff, the mortgages, and the consulting, you get about $115,000 which we were able to save.  So that’s how we were able to move the needle forward, despite a down market.

Of course, this was a bit of a boon of a year.  In 2016 we definitely won’t have any windfalls from leaving Medtronic, nor will we have me saving in my 401k, and who knows what will happen with my consulting.  On the other hand, in 2016 we’ll be free from our LA mortgage so we’ll be able to take full advantage of the lower cost of living that NC provides.  There’s absolutely no way we’ll save as much in 2016 as we did in 2015, but that’s okay because we planned for this.


I hope this post scratched your voyeuristic itch a little bit.  That’s how the Fox family was able to keep moving forward despite a slightly down year.



Stocky’s 2015 performance


We talk about investing a lot and what you should do or what the historic data says is likely to happen.  But the rubber does eventually hit the road and real investments are made.  So now that 2015 is over, how did the Fox family do with our portfolio?  It only seems fair to ask.


Investment performance

From an investment performance perspective, 2015 was definitely a subpar year.  If historic returns are about 6-8%, we were well below that, sadly even dipping into negative territory for a couple investments.


Portfolio weight (beginning of 2015)

Portfolio weight (end of 2015)

2015 return

US stock index




International stock index




REIT index
















TOTAL      -3%


As you can see, pretty much all our investments were either flat or fell in value.  Luckily, Medtronic had another good year, but even that wasn’t enough to compensate for the losers.

If you put it all in the pot and mix it up, our portfolio had a return of about -3%.  Obviously that isn’t what we want, and returns like that aren’t going to make the Fox family secure in its retirement and other financial goals.  But it’s important to keep in mind 2015 was the first down year since the disastrous year which was 2008.  That was a 6-year winning streak, so it’s probably reasonable to expect that to end.  Fortunately, if you were going to have a down year, this one was pretty benign as those things go.


Changes in investment weightings

If you read this column regularly, you know that in 2015 we had two major life changes that had a big impact on our finances.  First, I quit my job at Medtronic, and second Foxy Lady got a job in North Carolina which sent the Fox family east.  If you look closely you can see the impact of those events on our portfolio pretty clearly.

Because I quit Medtronic all my stock options and company stock developed a “use it or lose it” quality.  So I exercised all my options and sold nearly all my company stock.  We used that money to help with the downpayment on our North Carolina house (since it took longer than we expected to sell our Los Angeles house).  So because of all of that you can see why our Medtronic holdings really fell.

Also, anticipating my leaving Medtronic, I front loaded my 401k to make sure I hit the $18,000 max before I left.  Since my 401k was all in US stock index funds (that had the lowest management fee), plus since Foxy Lady’s 401k is similarly all in US stock index funds, that led to the increase in the percentage of our portfolio that is in US stocks.  That and the fact that US stocks outperformed international stocks.

Finally, we did add another investment to our portfolio—Lending Club.  This definitely deserves its own post, but basically it’s a peer-to-peer lending website (so I grouped it with “Bonds/Cash”).  Right now it’s a small amount of money, but Foxy Lady and I have gotten our feet wet and like performance we’re seeing from this investment, so we’ll be increasing it over time.


Net worth increase

So all that’s great, but the bottom line is the bottom line.  What happened to our net worth in 2015?  Fortunately, despite a lower market dragging things down, our net worth was able to grow about 16%.

net worth graph

How is that possible, you ask?  Well, it’s just good ole saving money.  As I mentioned a couple paragraphs above, Foxy Lady and I both max out our 401k accounts, that being the primary way we save these days.  So despite the stock market not being very loving this year, we were able to offset that by putting more money in.

And as two foxes in our late 30s (Foxy Lady just glared and said “37 is clearly still considered mid-30s”), I actually look at this market dip as a bit of a good thing.  Using dollar-cost averaging, our 401k accounts were able to buy the same mutual funds we always did, but this time we were able to do so at a bit of a discount from what it would have cost before.

As you all know, I am incredibly optimistic about the future of the US and the world and the stock market.  So I know things will go up over the long haul.  If in the meantime I can buy some investments on the cheap, all the better.


That’s how we did with our portfolio.  The investments weren’t great, but we kept our nose to the grindstone and kept plugging away, which is really the most important thing you can do when saving for retirement.  How about you?  How did you do in 2015?


What’s causing the volatility? Part 2

Welcome back.  Yesterday I started listing off reasons we’re seeing so much more volatility in the stock market. In this blog I’ll take you home.


 “Skynet becomes self-aware at 2:14 a.m. Eastern time, August 29th.” –Terminator 2 (1991)

Terminator 2 - 5

Computer-initiated trading drives a major, and increasingly larger, portion of the volume in stock markets.  It’s a good thing for a few reasons.  It gives people more options in their trading strategies, it offers precision that humans can’t match, it doesn’t get tired or forget or anything like that.  But it also leads to a lot of volatility.

One of the major types of automated trading is “stop-loss” trades.  This is when someone owns a stock like Nike and says something like: “I only want to sell it if it starts to fall.  Right now the stock is at $50, so sell it if it goes below $45.”  Emotionally it makes sense.  Everyone knows crazy things can happen with stocks and it can all go to hell in the blink of an eye (see: Enron or Worldcom or Blackberry).  So as the name implies, this stops your losses at some level you establish.  Awesome.  You have more control.

The reason this increases volatility is that this type of trade tends to compound the problem.  When stocks are going down these stop losses trigger which sells more stock which drives the prices down further which triggers more sell orders and so on and so on in a downward spiral.  The obvious flaw is that the computers which are doing this don’t have any idea of the intrinsic value of the stock they are selling; they just know they are supposed to sell when the stocks hit a certain level so that’s what they do.

When rational humans look at these types of situation (maybe like Boeing on July 12) and can “see” that the market is overreacting, things tend to go back to levels that make sense.  Probably the best example of this is the Flash Crash of 2010.  On May 6 of that year, probably the craziest 30 minutes ever of stock trading occurred.  In a matter of minutes the market fell about 10% (equivalent to about 1700 points on the Dow Jones Industrial Average if this happened today!!!), and then just as quickly recovered nearly all the loss.

What made it so crazy was that no news drove it.  Maybe news of a nuclear war starting or a meteor on a collision course for earth would justify such a rapid move.  Of course there wasn’t that, but there wasn’t anything—no news from the Federal Reserve, no companies going bankrupt or countries defaulting on their debt, or a regional skirmish, or a refinery blowing up, nothing.

In the aftermath, the leading theories all ultimately pointed to automated trading.  Some sell order lowered prices slightly but just enough to started triggering stop-loss orders.  That started a selling frenzy that drove prices down, leading to more stop-loss orders and in an instant everything went to hell.  Once thinking people saw this and knew that something weird was going on, they started buying those shares which were selling at 10% or 20% or even 50% less than they were 20 minutes before and made things normal again.  Like so many examples here, we ended where we started, but we had a crazy ride in the meantime.  More volatility.


“We keep inventing better ways to kill ourselves”

The stock market is an evolving landscape.  There was a time long, long ago when it was just stocks.  Then derivatives like options and futures came along as well as buying on margin (borrowing money to buy your stock); and now we have stuff like credit-default swaps (I can’t say I fully understand those), virtual currencies, and other really exotic things.  Like a gun or a power saw or a car, these financial tools can be very useful when used correctly but they can be disastrous when used recklessly.

Generally speaking these investments lead to higher volatility because they tend to be very leveraged.  You can make really, really large investments without a lot of money.  To buy 1000 share of Medtronic would cost you about $75,000; but to “buy” that same amount using call options would cost maybe something like $2000.  Of course, derivatives like stock options are much more volatile, and can lose all their value really quickly.

All the sudden that means you can be a small-time investor who decides to throw a Hail Mary in the stock market.  Instead of needing a bunch of money to take a major position, you could do it with much less.  Realistically, I as an individual probably couldn’t take such a big position to impact the market, but certainly a small bank could.  There are dozens of stories where some trader at a bank took a crazy big position, often times using derivatives, that went bad.  Not only does it take the bank down, but when that bank falls, just like dominos, others fall with it.  Same story: increased volatility.


So we’ve covered a lot of ground and come up with a lot of things that make today’s stock market much more volatile than it’s ever been in the past.  But let’s remember that the stock market is ultimately about fundamentals.  How strong are the companies?  Are they coming up with new products?  Are they finding better, faster, cheaper ways to meet our needs?  Those are the things that make the stock market go up over time.  And I believe all those things are there in today’s stock market.

In fact, of all the reasons I cited for increased volatility, I think all of them are good for the long-term value of the stock market.  Information traveling faster is a good thing; a globalized economy is a good thing; computer assisted trading is a good thing; financial derivatives are a good thing.  They’re all good and they all are making stocks continue to be a good investment.  Remember, stocks have been on a relentless climb for over a century.  In 2015, despite all the craziness, we were still hitting new all-time highs.

Sure, sometimes people screw things up, and because of this new age, those mistakes make a big impact.  But that big impact fades, usually very quickly.  So Mimi, as always, I think the stock market has great prospects for the long-term future, and I’m putting my money where my muzzle is on this one.  Your daughter-vixen’s retirement money as well as your grandcubs’ college funds are fully invested.

What’s causing the volatility? Part 1


On Tuesday I responded to an email from a worried Mimi Ocelot about the free-fall the stock market is going through right now.  I provided a historical perspective of what is going on.  In this post I am going to give some reasons I think we’re experiencing all this increased volatility.

And I need to apologize.  I started writing this and it got so long (I try to keep my posts at about 1000 words) that I need to split this into a part 2 and a part 3.  So enjoy this and then tune in tomorrow for the exciting conclusion.


“The times they are a changin’”—Bob Dylan

As I wrote here, the volatility in the market is definitely going up.    Of those 17 two-week periods as bad as this one since 1950 that I mentioned on Tuesday, eight occurred in the fifty years from 1950 to 2000 which means that nine occurred in the fifteen years from 2000 to 2016.  There’s no question that the market has become MUCH more volatile lately.  Is this a temporary thing or a new normal?  Who knows, but I tend to lean towards “new normal”.  Now let’s try to figure out the “why” part of this mystery.


“Ready, Fire, Aim” –Tom Peters (1982)

Nearly everyone agrees that information is the lifeblood of the stock market.  Today, that information travels so much faster than in the past.  Something could happen in the most remote corner of the world, and you would know about it in everywhere in a matter of seconds or minutes.  Obviously quicker access to news is a good thing for society at large, and investing in particular, but it definitely exposes many investors to making big mistakes because they are acting so quickly.


A good example is July 12, 2013.  On that day a Boeing 787 caught on fire a Heathrow Airport in London.  Here’s some quick historic context: the 787 was Boeing’s next generation aircraft that was going to revolutionize air travel, a plane Boeing pretty much staked its entire future on.  In early 2013 two 787s caught fire, leading to the FAA and its counterparts around the world to ground all 787s until Boeing figured out the problem.  Boeing’s stock, as you would expect, got hammered.  It took Boeing several months, but they fixed the problems, got the 787s in the air again, and their stock recovered.

Then July 12 happened.  News broke that another 787 caught on fire.  Investors, understandably, concluded that the problems weren’t fixed after all and that the planes would be grounded again.  In a matter of minutes the stock cratered, falling from about $108 per share to $99.  Over the following hours and days, it became clear the July 12 fire had nothing to do with the previous problems; it was just one of those things that do happen every once in a while.  No big deal.  Two weeks later, Boeing’s stock was back to the pre-July 12 fire levels.  It was all like nothing happened; except it did happen and there was crazy volatility in the stock.

The morale of the story is that investors got the information so quickly and rushed to act on it so quickly, that they completely misevaluated the situation, and that led to a lot of volatility.  Had the news traveled more slowly, the world would have had more time for more of the facts to come out.  No matter how you slice it, the light-speed fast news makes the pace of investing faster, and when you do something faster, you tend to make more mistakes.


 “The chief business of the American people is business” –Calvin Coolidge (1925)

UNITED STATES - AUGUST 03: Official Portrait Of Calvin Coolidge On August 3, 1923, Then Vice President Who Succeeded Harding As President. He Was Elected In 1925. (Photo by Keystone-France/Gamma-Keystone via Getty Images)

We Americans are probably a bit spoiled.  There have been no wars fought on our soil since 1865 (I didn’t count Pearl Harbor, which reasonable people can debate).  There has been a consistent government since 1787 (or 1865 depending on how you think about the Civil War) without any coups or revolutions.  There’s never been a military takeover of the government, and the US government has never defaulted on its debt.  You could go on and on.

The reason that is important is that today about one third of all earnings in the S&P 500 come from outside the US.  It’s hard to find out what that number was in 1950 or 1960, but suffice it to say that that number was much, MUCH lower back then.  So we have a lot more international exposure now than in the past.

That’s a good thing because of diversification.  But it does expose us as investors to some of the geopolitical challenges that I just mentioned, that the US has been blessed to have avoided.

Also, to President Coolidge’s quote, the US tends to be oriented towards business (and some, but not I, would argue too oriented towards business).  This has definitely helped us become the largest and strongest economy in the world.  But other countries have other orientations (I’ll try not to use too blatant of stereotypes to offend my international readers): the Middle East is very theocratic, Japan focuses on saving face (keeping it from writing off bad debts which has stalled its economy for two decades), China is very authoritarian, Europe is more socialistic.  That doesn’t mean any of those other perspectives is bad.  But it does mean they are less likely to drive greater business and productivity, and those are not good if your goal is to have your stocks grow.

If you’re exposed to those geopolitical landmines as well as those competing priorities, it shouldn’t be surprising that the road won’t be as smooth.  And that’s just French for saying more volatility.


“The world is getting smaller” –Mark Dinning (title of a song from 1960)

Somewhat related to the above issue, the world is getting smaller (don’t think the irony is lost on me that a phrase we use to describe how fast the modern world is changing came from a song two decades before I was born).  Everything is so much more connected now, whether it be products (your car is connected to the internet which depends on satellites and under-water fiber optic cable) or countries (the components for your phone probably came from a dozen different countries).

All that interconnectivity is a good thing.  It means people/companies/nations can specialize in what they do best, allowing us to get the best products and services at the lowest prices.  But that connectivity also means that when the stone falls in the pond in one part of the world, the ripples hit everyone in some way, big or small.

Back in the day when the US economy was largely self-reliant, and even local economies were fairly independent, if crazy stuff happened across the world or even across the country, it didn’t affect things at home that much.  That impacts volatility because something is always going crazy somewhere.  And of course, that carries over to stocks which react to that craziness.  Gone are the days when General Mills was a regional foodstuffs provider for the Midwest; now its stock is affect by the Los Angeles longshoremen striking, the drought in sub-Sarahan Africa, and the revaluation of the Argentine peso.  Once again, more volatility.


This seems like a good stopping point.  We we’re almost done.  Come back tomorrow, same fox time, same fox blog, for the exciting conclusion to “What the hell is going on in the stock market?”

Two weeks into 2016 and already down 8%–OUCH

Dear Stocky,

Is anyone else besides me getting nervous about what’s happening in the stock market lately?  I always thought that the stock market did well in an election year but they’ve been going down.  I guess today things are a bit better.  But what do you think is going on?

I need to read some of your calming words again……

Mimi Ocelot



Here is an email that I got last Thursday.  The ironic thing is the market was up Thursday, but then crashed again on Friday, down about 2.5%.  So it’s understandable that Mimi Ocelot is nervous.


Also, for the sake of disclosure, Mimi is my mother-in-law, Foxy Lady’s mom.  Having known her for nearly 10 years, I can say she is definitely a nervous soul, but with the craziness going on in the market it’s understandable that even the heartiest of souls could be getting nervous.  Here is my take on the latest market gyrations.


“Just the facts” –Joe Friday, Dragnet


First, let’s look at the facts.  The thing about the stock market during election years is a bit of an old wives’ tale.  If you look back to 1950 (when the S&P 500 started), the returns during presidential election years averages about 7%, and the returns during other years averages about 9%.  So election years are a little worse, but they are both pretty good.  So this is another instance where people try to predict the market and they find they’re right about half the time and wrong about half the time.

Now let’s try to put these first two weeks of 2016 into perspective.  Stocks are down over 8% which is a pretty crazy steep fall over two weeks, but it’s not unprecedented.  Since 1950, there have been 17 two-week periods that had falls this bad or worse.  And of those 17 instances, 11 of them saw the stocks recover to their “pre-drop” levels a year later.  So that tells you most of the time you have these steep drops but the recovery is not that far off.

The other 6 times you ask?  One instance was during the 1987 market crash, and the other five were from the 2001 internet bubble or the 2008 financial crisis.  So maybe the recovery took a little longer, but not much.  After a couple years, stocks were hitting new highs.

So if you want encouraging words, I am definitely optimistic.  We’re going through a tough time, but nothing all that different from what happens every few of years.  Actually, the things that fundamentally affect the value of the stock market—a strong economy, innovation and scientific advancement, new products—all seem positive.  So I wouldn’t be worried.  Of course, Foxy Lady and I have a much longer time horizon that Mimi Ocelot so we can ride out a longer storm.  But things will be fine.

That said, there are some interesting market dynamics going on, especially lately.  I actually have a lot to say on this so I am going to break this up into a two-parter.  So tune in on Thursday to hear what I think is driving all this craziness.

Picking your investments for 2016


The new year is a special time for me.  It’s a fresh start and a time of rebirth (even though it happens in the dead of winter).  You make resolutions, many of which you won’t keep, because this is the time to think about what you want to do before you get sucked into the rigmarole of actually doing it all.

For investing, it’s a natural time to reflect on your financial situation.  Am I saving enough to get where I want to go?  Am I investing that money in the places that make sense?  For this post I want to focus on the second question of where should you invest your money, and particularly should you change it from one year to the next.

Every year you have investments that do well and others that do poorly.  When you look on 2015 you’d see that international stocks (down about 4%) didn’t do nearly as well as US stocks (down about 0.2%).  Based on that what should you do?

One school of thought would be to invest more with US stocks.  If they did better last year, then it stands to reason that they’ll continue to do well since there probably hasn’t been a lot that has changed.  So stay with that winner.

The opposite school of thought is that the international stocks had a down year so they are probably “due” to do better.  Intellectually, I think this is the much more tempting strategy.  We know that stocks can’t continue incredible performance forever; eventually they will have an off year.  We also know that a well-diversified portfolio can’t continue to suck forever; eventually they will rebound (like stocks after 2008).


To answer this question with a little more analytic rigor I used my handy dandy computer and some free data from the internet.  Just to make things simple, let’s assume we live in a world with only two investments: US stocks (VTSMX) and international stocks (VGTSX).  As I mentioned, in 2015 US stocks did better than international.  So should we invest more in international?

Using data going back 19 years (that’s when the international index fund I am looking at started), the US fund has beaten the international fund 10 times.  That’s almost dead even—10 wins for US and 9 wins for international.

But the “wins” are very streaky.  US stocks performed better in 2015 as they did in 2014 and 2013.  On the other hand, International stocks outperformed US stocks for five years in a row starting in 2002.  Based on those snippets, you would have been worse off by switching your investments to last year’s underperformer.

If you look at all 19 years, there were 8 years when the lower performer from the previous year did better the next year.  Again, that’s about 50% of the time—8 years where the lower performer did better the next year, 10 years where the higher performer did better (it doesn’t add up to 19 because we don’t know which will do better in 2016).



Investment that did better that year

Investment that did better the next year


























































In a way the data is comforting, and it came out the way I predicted since I am a believer of efficient markets.  These theories on which stocks will do better tend to work about as often as it doesn’t.  Instead of spending a lot of time and effort trying to “figure out” which investment will do better, you’re probably best served just sitting tight.

The Fox family invests about equally between US and international stocks.  That means international stocks served us very well in the early 2000s but not so much the last couple years.  As far as next year goes, who knows?  I could tear the data apart and analyze it a million different ways, and I’d probably come out with something that said “doing it that way is better 50% of the time, and doing it the other way is better 50% of the time.”

So as the Fox’s take stock (pun intended) of our finances, we’ll continue plugging along with the same diversified investments we’ve used in the past.  Instead of trying to figure out which investment will do better this year, I’ll send that energy trying to figure out where Mini Fox hid the television remote.

2015 year in review

I hope everyone had a great holiday season and a happy new year.  For us, the cubs got too many gifts under the tree (note to self: next year, make Christmas less materialistic).  I was the only one still up to ring in the new year, and I did that binge watching A Game of Thrones.

We made it through a pretty wild year for stocks.  In no particular order, here are some of the major stories, events, decisions, and issues that drove the stock market:


2016 stock performance 

Down year for US stocks—This was the first year since 2008 that the US markets had a down year.  That’s pretty good: a 6-year streak.  And this year really wasn’t that bad.  US stocks were down less than 1%, so I suppose if you are going to have a down year, this is the kind you’d like.

Of course, even though stocks ended the year very nearly where they started, it was a crazy ride in between.  At one point, stocks were up for the year about 4%; a couple months later they had lost all those gains and then some, being down about 6% for the year.  After all those zig-zags, they settled where they started.  There’s probably a lesson there, that if you stay calm and look past the short-term craziness, these things tend to work out.


International stocks still struggle—International stocks had a much tougher year than did US stocks, being down about 2-4% (depending on how you define “international stocks”).  As wild as the ride for US stocks was, it was even wilder for international stocks.  They started out like a bat out of hell, gaining about 10% by the time summer came around, but just like their US counterparts, they swooned in the fall, losing all their gains and then another 4% or so.  That’s pretty crazy, a 14% swing in a couple months.

Looking back on the major stories that drove that, to me there are two: Greece and China.  The Greek epic (or should I call it tragedy?) continued with high-level brinksmanship rattling the markets as the deadline for their debt loomed.  Sadly, the powers that be kicked the can down the road, giving Greece another short-term loan that will carry them for a couple years.  Mark your calendar, we’ll do through this whole thing again in 2017.

China also rattled the market.  After years of 8-12% economic growth, China’s economy has started to show some real signs of slowing down.  In 2016 most experts are predicting something in the range of 6%.  Make no mistake, that’s still a lot of growth, much higher than the US’s 2% or any other developed nation’s.  But that’s a major pull back for China, and of course that directly translates to a lower market.

Finally, there was the horrible terrorist attacks in France.  This was probably the biggest story of the year, so that’s why I mention it.  However, as deplorable as they were, they pretty much had no impact on the stock market (they took place in November which was a mixed month for the markets).  Sure, the days following the attacks the markets were a little shaky, but that wore off when people started to realize that companies would still produce products and people would still consume those products.  I bring this up as a reminder that many of those events that are most troubling to us have little impact on the stock market.


Fed raises rates—After seven years of keeping interest rates at about 0%, in December the US Federal Reserve raised interest rates by a whopping 0.25%.  A quarter percent really isn’t that much, but this was largely symbolic.  During the 2008 financial crisis, the Fed dropped rates to that 0-ish% level, the lowest they had ever taken rates in history.  I certainly look at this as good news, in that the Fed thinks that the US economy is strong enough to withstand higher interest rates without slowing growth or raising unemployment.


So that’s the year in a nut shell.  When you take an entire year, and condense it to a few hundred words, I think it does put things in perspective, especially with the stock market.  In 2015, there were probably over a billion words written on what was happening, what had just happened, and what would happen the next day.  In the end, we had a flat year.  To me this just shows how much energy and emotion gets put into this stuff which is largely wasted.  You can just invest your money and then focus on other, more important things like if the Broncos can win the Super Bowl or if Jon Snow is really dead.

Finally, I would be remiss if I didn’t thank you readers for taking this journey with me.  I am especially thankful to all those who left comments and helped me make this blog and fun and informative one.

Here’s to a great 2016.  As to what I think will happen: I have no idea but I am fully invested.