(PUB) Investing 2016

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A PUBLICATION OF FUND FAMILY SHAREHOLDER ASSOCIATION • VOL. 26, NO. 1
Meandering Markets
DECEMBER TURNED OUT TO BE SOMETHING OF A MICROCOSM of the year with
its swoops and swoons. Total Stock Market Index was down 3.9% midway through
December but ended the month with a 2.0% loss, and finished the year with a fractional
0.3% gain. Total Bond Market Index was up almost a half percent at one point but
ended the month down 0.4%. It also finished 2015 with a 0.3% gain. Though I know
the turn of the calendar is meaningless in the investment context within which you and I
work together, I’m glad we made it out of 2015 bowed but not broken.
It wasn’t only the financial markets that made stomachs churn as 2015 came to a
close. Many of you reported that dividend distributions were messed up when Vanguard
began consolidating fund and brokerage accounts, sometimes reinvesting when you
wanted cash instead, for instance.
Vanguard says it’s fixed the problem, investors will be made whole and that the prob-
lems were limited to a “modest” number of accounts. My advice: Make darned sure that
your money is where you expect it to be, and that it’s going where you want it to go. Please
keep me apprised of any further travails by emailing at .
Oh, and that wasn’t the only service glitch I heard about as the year was coming to a
close. Apparently, if Vanguard tells you they’ll be able to handle the required minimum
distributions from Vanguard-offered 401(k) or 403(b) plans, you’d better check and
double-check. One Flagship member (that’s someone with at least a million bucks at
Vanguard and who is supposedly working with Vanguard’s best client reps) told me that
The Independent Adviser for Vanguard Investors and FFSA are completely independent of The Vanguard Group, Inc.
OUTLOOK 2016
Pause, Regroup, Continue
RETURNS DROPPED, AND VOLATILITY ROSE. And in the end, 2015 left most investors
with little to show for their efforts.
That’s about as succinct a description of the past year as I can come up with. How that
translates into what we can all expect in the coming year is the million-dollar question,
of course. Here’s what I’m thinking.
First, I think the story in 2016 is going to be the strength of the U.S. consumer and the
willingness, or lack thereof, to spend. With the political silly season giving way to prima-
ries and then a full-on campaign, it wouldn’t surprise me one bit if consumers keep a tight
grip on their wallets. Why? Call it uncertainty, of which there’ll be plenty to go around.
That very uncertainty could breed opportunity. Like stocks, earnings didn’t really
go anywhere in 2015, and I truly believe that the stock market’s biggest drivers are
DOW JONES INDUSTRIALS
December Close:17425.03
STANDARD & POOR’S 500
December Close: 2043.94
4400
4650
4900
5150
5400
DN OSA J JMAM F J
NASDAQ COMPOSITE
December Close: 5007.41
0.00%
0.04%
0.08%
0.12%
0.16%
0.20%
0.24%
DN OSA J JMAM F J
3-MO.TREASURY BILLYIELD
December Close: 0.17%
1.6%
1.9%
2.2%
2.5%
2.8%
DN OSA J JMAM F J
10-YR.TREASURY NOTE YIELD
December Close: 2.27%
16000
16600
17200
17800
18400
DN OSA J JMAM F J
1900
1950
2000
2050
2100
2150
2200
DN OSA J JMAM F J
AVERAGEVANGUARD INVESTOR*
December: -1.4% YTD: -0.4%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
DNOSAJ JMAMF J
*See the footnotes on page 2.
Model Portfolios................................................................ 2
Ear-Plug Approved............................................................. 4
2015 Year in Review.......................................................... 6
Performance Review.................................................... 8-11
2015 Scorecard............................................................... 12
Contribute the Max for Retirement................................ 13
Morgan’s Multiple Manager Mess.................................. 15
Active Wins!.................................................................... 16
JANUARY 2016
SEE MEANDERING PAGE 3 >
S P E C I A L E X P A N D E D 1 6 - P A G E I S S U E
> SEE OUTLOOK PAGE 4