A trader on the floor of the New York Stock Exchange.
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Tech stocks made us look good. Can we get a do-over on energy?

By Matthew Heimer
December 28, 2015

Each year in the Investor’s Guide, Fortune runs at least one article devoted to picking stocks and stock funds. This year’s stock-picking feature, “Good Stocks for Bad Times,” recommends 16 stocks and ETFs that look promising for 2016. For the stock feature in last year’s Guide, we cast a particularly wide net, canvassing experts about dozens of sectors, foreign and domestic, and ultimately recommending more than 50 stocks, 7 ETFs and 5 mutual funds, in 20 categories.

So how’d we do? Let’s just say there are a few picks we wish we could take back. For the year through Dec. 4 (the anniversary of the date our picks went live last year on Fortune.com), our portfolio was down 7.1%, while the S&P 500 was up 0.9%. (Our math includes dividends and assumes an investment of equal amounts of money in each of our 20 categories.)

What went wrong for us? Like many investing pros, we believed that beaten-down energy and mining stocks showed real promise. And, like those pros, we watched our portfolios get beaten down, as oil and commodity prices dropped even further in 2015. Here’s a quick review of the portfolio’s highs and lows.

Thanks, Google…er, Alphabet

Some investors believe that the strongest tech companies are now “cycle-proof”—that is, their revenue and share prices can rise regardless of the state of the economy, because their services and products have become essential to businesses and consumers. That theory may help explain why three of the four best performers in our 2015 portfolio were tech names.

Our best-performing pick was Google GOOG , whose stock rose 44%. Much of that growth has come since July, when the company reorganized itself as Alphabet and endeared itself to investors by more clearly demarcating the revenue from its core advertising business and its moon-shot divisions. On a related note, we recommended that investors not buy Alibaba BABA , arguing that its business model didn’t justify its lofty valuations. In this case, we were on the money.

 

Our other tech winners included two companies whose business strategies increasingly revolve around cloud-computing services: Red Hat RHT (up 33%) and Microsoft MSFT (up 18%). Fortune Investor’s Guide contributor Jon Birger thinks Microsoft has more room to run; he recommended them as one of his picks for 2016.

Natural resources sapped our resources

Gold and copper prices fell by double-digit percentages in 2014. We didn’t think that would happen again in 2015, and consequently, we argued that some mining stocks were good buys. That call turned against us, to put it mildly, as metal prices kept tumbling: The 8 “oversold mining stocks” we identified last year collectively lost 33%. None fared worse than Freeport-McMoRan, whose value dropped by almost 70%. Freeport-McMoRan FCX could “make free cash off of $3 copper and still pay a dividend,” one fund manager told us a year ago; alas, the price of the metal didn’t top $3 a pound all year, and it now trades close to $2.10.

 

Oil prices also lulled us into a value trap for 2015, sinking ever lower (and doing further damage to energy stocks) as producers surprised investors by opting to keep pumping. Six of the seven energy-related investments we named lost value over the past 12 months, with the Eagle MLP Strategy Fund, which specializes in pipeline master limited partnerships, ranking as one of our worst performers. Another big loser: Mexican cement and building-materials company Cemex CX , whose earnings dropped because of a slowdown in construction in countries whose economies have been hit by the global commodities slump.

If you don’t count our three natural-resources categories, our portfolio’s performance over the last 12 months roughly kept pace with the S&P 500. Then again, if you don’t count their losses, my hometown San Francisco 49ers were a great football team this year. We hope to post a better record in 2016.

For more coverage from the Fortune 2016 Investor’s Guide, click here.

 

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