Canadian stocks in 2015 turned in their poorest annual performance since the start of the financial crisis in 2008, leaving investors rattled and some market strategists convinced the worst is over.
"We believe any positive news stemming from emerging markets, Europe, and commodity prices will likely be a strong positive tailwind for Canadian stocks," Brian Belski, chief investment strategist at BMO Nesbitt Burns, said in a recent note.
But the upbeat forecast follows a truly discouraging year for investors.
The country's benchmark index, the S&P/TSX composite, fell 11.1 per cent, the worst performance among developed markets. It has underperformed the S&P 500 – which fell just 0.7 per cent in 2015 – for five straight years.
Factoring in the Canadian dollar, which tumbled to 72.2 cents from 86 cents at the start of the year, the difference between the two indexes stretched to nearly 30 percentage points in 2015 – the biggest difference, in Canadian-dollar terms, since 1998.
Struggling commodity producers, which account for about a third of the index, take some of the blame.
Canadian mining stocks fell about 23 per cent, following weaker prices for gold and base metals. Energy stocks fell nearly 26 per cent, after the price of oil retreated about 30 per cent for the year, closing near 11-year lows.
But even stocks known for steady dividends and consistent profits were hit: Utilities, financials and telecom stocks all ended the year lower.
"The perfect word to describe Canada this year was 'vomitous,' " said Barry Schwartz, chief investment officer at Baskin Wealth Management in Toronto, according to Bloomberg.
"Investors threw up and threw out everything to do with Canada."
However, Mr. Belski believes Canadian stock prices are now being driven by fear, making 2016 look considerably better if these emotions subside.
Besides, he noted that the S&P/TSX composite index has never underperformed the S&P 500 for six straight years.