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It's official: 2015 a tough year for making money

Investors can't be blamed for cheering the end of 2015. What started off as a strong year for equities ended up as a fizzle, but not without some drama in the months in between.

The Standard & Poor's 500 index closed the last trading day of 2015 at 2043.94, or a 0.7 percent decline from where it began on Jan. 2. While that means it was a difficult year for many investors to eke out returns, it could have been far worse if stocks hadn't recovered from the August rout that sent the S&P plunging to its worst monthly performance in more than three years. And for its part, the Dow Industrials ended 2015 down 2.2 percent, marking that index's first annual drop in seven years.

While the S&P 500 recovered its equilibrium after the August slump, 2015 has been a wash for many investors, especially those invested in indices that mirror the broader market. That may make some grumble, but the past few years have provided outsized returns without much volatility, proving to be an exception to long-term trends. Based on historical standards, 2015 wasn't even all that volatile, said Brad McMillan, chief investment officer of Commonwealth Financial Network.

"People talk about the volatility this year, but we haven't seen significant price movements by historical standards," McMillan said. "Granted it's the first down year since 2011, but that's not historically uncommon."

Instead, he said he views the market's water-treading performance as "a story about the shortcomings of index investing," given that investors who put their money behind S&P 500 indices would have ended up down for the year.

That doesn't meant that active funds or management styles could have fared any better than indices, however. One unwelcome surprise this year was the slump in the energy sector, which was the worst performing sector this year in the S&P 500. Thanks to a global oil glut that drove down crude prices, energy stocks declined almost 24 percent this year through Wednesday, according to S&P Dow Jones Indices. Excluding energy stocks, the market would be up this year, according to USA Today.

"A lot of investors got absolutely surprised" by the energy sector's slump, McMillan said. "Very few people were saying it was going to go down as low as it had. There was the presumption that it wouldn't happen, and that's where you get in trouble."

On the flip side, a handful of high-flying tech stocks known as FANG -- short for Facebook, Amazon, Netflix, and Google -- provided extra juice to those investors who added the richly valued companies to their portfolios. Amazon and Netflix, for instance, more than doubled this year, while Facebook and Google each saw double-digit gains.

"They are momentum stocks," McMillan said. "There's no telling how high they will go. They could live up to their valuation, but it's hard to tell when hype decouples from reality." He recommends that the stocks should not be a core part of an investor's portfolio.

Bonds didn't provide much relief either, with intermediate-term bond funds losing an average of 0.4 percent, according to The Associated Press. Junk bonds fared even worse, losing an average of 4.1 percent.

Next year may bring some relief for investors, according to forecasts. Stocks in the S&P 500 may provide "mid-single-digit returns" in 2016, according to a research note from LPL Financial, the largest organization of U.S. independent financial advisors. But that may come with more volatility than investors have seen in recent years, which could prove challenging for some, the group added.

McMillan said there are some reasons to be optimistic for better days ahead in 2016. "The important thing to remember is the U.S. remains from an economic point of view the place to be," he said. "The fundamentals will continue to improve" thanks to improvement in the unemployment rate and income growth. He added, "The market will do better than people think."

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