The S&P 500 finished both "up" and "down" in 2015.
The raw index (price change only) dropped -0.7% during the year.
However, with dividends (total return), the S&P 500 edged +1.4% higher.
Either way you look at it, stocks finished mostly flat this past year.
As you probably know, a flat year for the U.S. stock market’s largest 500 stocks doesn’t mean all if its constituents stood still.
Some of the index’s holdings had a fantastic year …
A good mix of stocks. Some individual stock moves may have been predictable (yes, we’re playing Monday Morning Quarterback … or Week 18 Quarterback, in this case) due to the continued development of a few mega trends…
Take Netflix (NFLX), for example. The video-streaming provider finished in the No. 1 spot last year. As pay-TV subscribers continue to cut the cord, alternatives like Netflix, Hulu ($CMCSA) and Sling are benefiting. Consumers are fed up with annual rate increases from their cable providers. By the way, higher bills are on deck for 2016.
Even No. 2’s trend was foreseeable.
Amazon’s (AMZN) hassle-free, online shopping convenience continues to steal more orders from big-box retailers. Macquarie Research reports of every $1 Americans spent for items online in 2015, Amazon captured 51 cents.
Millennials — and their parents and grandparents — are choosing to shop online. Why spend gas money, battle for parking spots and wait in long lines? Especially, when free shipping is involved!
Total online sales on Cyber Monday rose 16% from last year, to $3.07 billion — a new record for a single day of online sales.
Now remember, the index had a flat year. So, there’s another side to this story …
Here are the index holdings that were dinged the hardest in 2015 …
Notice the words "energy" or "oil" in six of the 10 companies listed above.
Energy (-23.6%) was the worst-performing sector in 2015 by a large margin. (Materials won the consolation prize at -10.4%, finishing a distant second.)
The decline in the price of oil was responsible for the sector’s large loss. Ending 2015 at $37.04, the price of oil fell -30.5% from its 2014 closing price of $53.27.
Basically, if you shunned the energy sector, you dodged the S&P 500’s worst performers.
What’s our advice for 2016?
If you’re looking to capitalize on some individual stocks this year, you might look at some of the bottom-feeders from last year. For example, the S&P 500’s best-performing stock in 2015 (Netflix, up +134.4%) finished 2014 ranked at No. 430 (out of 500 stocks).
And the second-best-performing stock in 2015 (Amazon, up +117.8%) finished 2014 ranked at No. 473 (out of 500 stocks).
To find beaten-down stocks, as we’ve shown above, start with the energy sector. While the price of oil fell -30.5% in 2015, it’s actually down -65.5% over the last year and a half. If the price of oil rebounds this year, certain oil and gas companies will benefit more than others.
Which energy stocks are the most attractive candidates?
Click here to unlock one of JR Crooks’ — Uncommon Wisdom Daily’s natural resource expert — top energy plays for 2016.
Now, if you’re a plain vanilla investor, we have simple guidelines …
Maintain a diversified portfolio … Stay invested (for long-term investors, choose dividend reinvestment and dollar-cost averaging where applicable) … And mind your stop losses.
The Uncommon Wisdom Daily Team