Yes, Investor, there is a Santa Claus but his rally present was certainly on the stingy side. As the old Randy Vanwarmer song went, he let us down just “when I/we needed him most!”

Certainly I’m happy he showed up, for two reasons. First, his late arrival justifies my year-long (really seven-year long) mantra of “buy the dips.”

Second, the return of stock buyers whenever we hover around 5000 or just below tells us that the majority of stock players doesn’t see our market worthy of being at 6000, which we missed by five lousy points on March 23. However, it’s not so bad that we have to be below 5000.

The 5995 level on the above date was determined by more positive expectations than the reality that actually showed up. Our economy grew slower than expected and while our dollar was falling, which would help company profits and the economy’s expansion, it was still 81 US cents in May.

We also had the leadership issues and Tony Abbott’s less-than-impressive showing. Joe Hockey was also under fire, though his second Budget was a bottler for small business and the improved economy we see now is linked to both the dollar and the better Budget.

China was a letdown merchant with slower economic growth and that silly stock market of theirs really spooked everyone when it fell 30% on July 8.

This is how the ABC website reported it: “The main index, the Shanghai Composite, has plunged by 30 per cent since its peak in the middle of June, the biggest three-week fall in more than 20 years. The value of Chinese stocks has plunged by at least $US2.8 trillion ($3.7 trillion).”

China’s economic data continued to disappoint but it didn’t really do as badly as doomsday merchants predicted. Their forecasts hurt market confidence but also hit commodity prices hard.

And then there was Greece, which was a distraction. It also offered another uncertainty – could a Greek exit from the Eurozone happen? And how would financial markets respond if it did?

We weren’t helped by the procrastinating Fed, which added more uncertainty to the mix. A rate rise was always going to be a sign that the US economy – the world’s biggest – was in recovery mode but no one knew how bond markets would react.

Pests kept talking about a bond market implosion or explosion (I don’t know the difference!). However, they seemed to have been wrong but it was another worrywart for investors. It also provided opportunities for short sellers and hedge fund managers, who need volatility to make money.

Of course, the really big negative for our market was how the China and overall global economic weakness mixed in with groups such as OPEC, BHP and Rio, which were oversupplying their markets. Down went commodity prices and share prices followed.

On Monday, I’ll outline my blueprint for investing in 2016 but suffice to say that I expect 2016 to be like 2015, but better!

We need to see economic out-performance here and globally, which will help commodity prices and, in turn, share prices could overreact in the better direction than what we saw in 2015.

I don’t like that we started this year on the S&P/ASX 200 index at 5411 and ended at 5295.9, which was a 2.1% loss. However, if you throw in 5% for dividends (I hope you got at least this return on dividends), then we were up 2.9%, which does beat term deposits!

What I liked

• The S&P/ASX 200 index was as low as 4909.6 on December 16 but ended up at 5295.9, so that’s a 386-point gain, or 0.8%. That’s a stingy Santa Claus rally but it’s still a rally and the actual time for this festive rally ends after two trading days, so we have to give Santa the benefit of the doubt!
• US consumer confidence rose from 90.4 to 96.5 in December (forecast 93.8).
• The CaseShiller measure of US home prices rose by 0.8% in October (forecast +0.5%) to stand 5.5% higher than a year ago.
• US chain store sales rose by 2.5% in the latest week compared with a year ago, up from the 2.1% annual gain in the previous week.

What I didn’t like

• Private sector credit (outstanding loans) in Australia rose by 0.4% in November, the slowest growth in five months. Annual credit growth eased from a near 7-year high of 6.7% to 6.6%, so the designed home loan slowdown of the RBA is not disastrous.
• Newspaper articles telling us that Treasurer Scott Morrison has a big job to do on tax, super, the deficit and the country’s debt. His main job is to get the economy growing and when that happens, taxes come in, spending on the dole decreases and the debt/deficit starts to fall. Then he can try to create a better tax system.
• Talk of an early election! That would hurt confidence and make the electorate look at PM Turnbull in a very cynical and counterproductive way. We need a PM who creates growth, jobs and confidence. When that happens, he’ll get a lot of reform across the line.
• In China, profits of industrial companies fell by 1.4% in November, the sixth straight month of annual decline.
• Oil prices that had had a good week, fell after the fall in profits by Chinese industrial companies.

A Happy New Year for a Happy Year

As I said above, I’ll look at what I expect for 2016 on Monday and how I’ll be investing but let me give you a sneak preview of what I’m thinking.

I said 2016 will be like 2015 in many ways, but better. That’s because I think a lot of the curve balls that looked unhittable in 2015 will straighten up during 2016. Also, there should be less curve balls and I still believe that the really big players, who’ve been hitting home runs since the GFC (i.e. central banks) will remain the big hitters next year.

When I lose confidence in them and I start worrying about the global economy, that’s when I’ll become a bear and that’s no bull!

Have a happy 2016 and I hope we at the Switzer Super Report will deliver some pretty good happiness too.

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