With a few days remaining in 2015, I created a couple charts that I thought were interesting. As Josh Brown wrote, it was the year of FANG (Facebook, Amazon, Netflix, and Google). The chart above shows how these four stocks have performed this year with the S&P 500 for comparison. It is easy to see why people may become enamored with owning them. On the other hand, investors owning any resemblance of a generally diversified portfolio probably didn’t do so well comparatively speaking. The chart below shows the performance of the S&P 500 (SPY), Total Bond Market ETF (BND), Emerging Markets ETF (VWO), and Developed Markets ETF (VEA). Not so fun.
Compared to each asset class, with diversification one will never be the best but will never be the worst by definition. However, this doesn’t make it any easier, especially depending on one’s frame-of-reference. Comparing one’s portfolio to a neighbor’s is asking for headaches. To paraphrase Josh Brown again, people don’t want to see the data when there is a party going on (Facebook, Amazon, Netflix, Google) and they are left out. As always, behavior matters just as much, if not more, than the investments themselves. A good strategy that one can stick with will always outperform a great strategy that one can’t, and while the change in the calendar year may not matter as it relates to the nitty gritty of one’s portfolio, it is a solid marking point to reflect on one’s behavior and thought process.