Virtual Capitalist

Published by Nick Routley To say that 2020 was an unusual year in markets would be a vast understatement. In 2020, we saw the quickest and deepest bear market decline in history, trillions of dollars of global stimulus, the highest volatility (VIX) on record, negative oil prices, and the fastest recovery from a bear market ever—just to name a few of the abnormalities. And while the broader economy is still in a state of repair, investors finished the year in the black. The S&P 500, for example, ended with 16.3% gains, which was an above-average outing for the benchmark index. Winners and Losing Sectors of 2020 Today’s visualization uses an augmented screenshot of the FinViz treemap, showing the final numbers posted for major U.S.-listed companies, sorted by sector and industry. As you can see, the best and worst performing sectors generally fall into two categories: those that benefitted from COVID-19, and those that didn’t. This massive divergence is evident in the numbers. Companies in winning sectors are often up double or triple digits—while their losing counterparts were often down double digits, sometimes even halving in value from how they started the year. The Winners 1. Software Applications It was another banner year for Big Tech, but some of the top performing companies were those that acted as enablers to remote working and ecommerce. Perhaps the most notable entry here is Shopify, which rose 178% on the year and is nearly a $150 billion company today. 2. Internet Retail While Amazon is the undisputed 800-pound gorilla in ecommerce, companies like Etsy and Wayfair also had incredible years—as did many internet retail plays on the opposite side of the Pacific. Chinese company Pinduoduo, described as the fastest growing tech company in the world, gained 331% on the year as it capitalized on emerging trends such as social ecommerce, team purchasing, and consumer-to-manufacturing (C2M) sales. 3. Basic Materials It’s been a long downtrend in the commodity super cycle, but materials have come back into vogue. Copper prices are at eight-year highs, and gold hit all-time highs in August 2020. Some companies, such as Albemarle—the largest supplier of lithium for electric vehicles—doubled their stock price over the course of the year. 4. Freight and Logistics The shift to ecommerce has come faster than anticipated, and companies like FedEx and UPS couldn’t be happier. And with the transportation of ultra-refrigerated vaccines lining up to be a key need of 2021, it’s no surprise to see Cryoport up 165% on the year. 5. Semiconductors For a second straight year, semiconductor companies finished as winners on our list. The world needs more hardware to house and process the ever-expanding datasphere, and companies like Nvidia showed triple-digit gains in 2020, up 117%. Honorable mentions: Discount stores, retail home improvement, farm and heavy construction machinery, medical care facilities, and consumer electronics The Losers 1. Oil and Gas The oil sector was already struggling pre-COVID with price wars and a supply glut, but then lockdowns and the shutdown of non-essential travel provided another blow. BP finished the year at nearly half its market capitalization, falling 46% on the year. 2. Diversified Banks With record-low interest rates, shuttered physical locations, and credit risks looming from unemployed borrowers, bank stocks struggled in 2020. Wells Fargo, for example, finished down the year 44%. 3. Real Estate – Retail Many malls have not been collecting rent checks from their tenants, creating a challenging environment for many property owners and managers. Simon, the country’s largest shopping mall operator, felt the pain as its stock dropped 41% in 2020. 4. Airlines It goes without saying that less flying means less revenue for airlines. But going forward, with web conferencing now the professional norm, it’s also expected that lucrative business passenger numbers will take a hit in the future. United Airlines finished the year at less than half their market capitalization (-54%). 5. Aerospace/Defense Many aerospace and defense stocks were unable to rebound to pre-pandemic levels. Boeing, for example, finished the year down 36%. Source:  https://www.visualcapitalist.com/best-and-worst-performing-sectors-stock-market-of-2020/ For more postings by Virtual Capitalist, click HERE Website:  https://www.visualcapitalist.com/  

By Niccolo Conte   Corresponding assets in the graphic top to bottom were measured using: XAGUSD, XAUUSD, Russell 2000, S&P 500, MSCI EM, Bloomberg Barclays Corporate Bonds Index, MSCI EAFE, iShares Trust US Treasury Bond ETF, S&P/TSX Composite, S&P GSCI, DXY, Dow Jones Real Estate Index, WTI U.S. Oil. How Every Market Performed in 2020 It has been a volatile year for financial markets and their participants, with some of the largest price fluctuations imaginable across just about every single asset. Despite the volatility, the combination of the Federal Reserve’s early stimulus interventions and positive vaccine news has rewarded dip-buyers and strong hands. Along with visualizing the returns across asset classes, currencies, and S&P 500 sectors, we’ve included their maximum drawdown for the year—the drop from the 2020 open to the 2020 lows—along with the recovery from 2020 lows to the closing price. This helps visualize 2020’s most resilient assets, along with the strength of their recovery. Markets Roundup for 2020 Of all the major asset classes, precious metals provided the best returns last year. Gold finished the year up 24.6%, but down from its all-time highs of $2,075/oz achieved on August 7th. Gold was also a resilient asset. Thanks to its strong start in January (4.8%), when March came around gold held up and only fell 4.4% below the yearly open. Silver’s performance over the year was also sterling, offering investors 47.4% returns despite a -34.7% pullback in March. Here’s a look at how all major asset classes performed over the course of the year: Asset Class 2020 Return Asset Type Silver 47.4% Precious Metal Gold 24.6% Precious Metal U.S. Small Caps 18.5% Equities U.S. Stocks 15.5% Equities Emerging Markets 14.6% Equities U.S. Corporate Bonds 9.7% Bonds Europe, Australia, Far East 5.1% Equities U.S. Treasuries 3.6% Bonds Canadian Stocks 2.8% Equities Commodities -6.6% Commodity U.S. Dollar -6.8% Currency U.S. Real Estate -8.4% Real Estate Crude Oil -21.5% Commodity U.S. equities and emerging market equities had double-digit returns despite the tumultuous year. Small cap stocks in the Russell 2000 outpaced the S&P 500 by 3%, but also saw a steeper drawdown during times of volatility. Although there were some wild drawdowns in 2020, nothing compared to the drop into negative prices for WTI crude oil that occurred in April. Futures traded all the way down to -$37.63 a barrel when travel cancellations brought oil demand to a standstill and supply cut agreements weren’t reached by OPEC members. U.S. government and corporate bonds had a positive year, however their returns were primarily driven by support from the Federal Reserve’s monetary policy and market operations. The Federal Reserve increased its portfolio of Treasury notes and bonds by 79% since March, with its total assets reaching $7.3 trillion at the end of 2020. Performance by S&P 500 Sector Unsurprisingly, the energy sector was hit the hardest last year, with value sectors generally struggling to perform compared to growth sectors. Information technology continued to outperform like in 2019, with Amazon (76%), Apple (81%), and Netflix (66%) the three best performing FAANG members. Other tech stocks like Nvidia (121%), Paypal (115%), and AMD (100%) comfortably sailed to new all-time highs with triple-digit returns for 2020. As the communication services (21.3%) and consumer discretionary (32%) sectors also performed well, the latter saw the biggest bounce from the lows of any S&P 500 sector (96%). Foreign Exchange Performance in 2020 Early on in the year, major currencies generally followed similar patterns as they all fell against the U.S. dollar in March’s flight to safety. The Swiss franc was one of the most resilient currencies, drawing down only -2.1% from the 2020 open. It was also one of the best performers at the end of the year alongside the euro and Australian dollar with gains of 9% or more. Timing the dip on the Australian or New Zealand dollar was the most rewarding opportunity for forex traders last year. Meanwhile, the Indian rupee, Mexican peso, and Russian ruble weren’t able to claw back the points they lost in March, with the ruble seeing double-digit losses. All eyes have been on the U.S. dollar’s free-fall downwards since it spiked up in March, and as the Biden administration prepares to take office, speculative traders have returned to selling dollars. Winners and Losers of 2020 The COVID-19 pandemic largely defined many of the winners and losers of 2020, as did the Federal Reserve’s expansion of the U.S. money supply. Zoom became an essential communications service in lockdown and Moderna and Novavax shares skyrocketed in valuation as they announced their COVID-19 vaccines. Bitcoin broke well beyond its previous all-time high, returning just over 300% from the 2020 open and more than 650% from the lows. Tesla had an even more spectacular run, returning 745% and making Elon Musk the second-richest man in the world. Meanwhile, as global travel quickly came to a halt last year, Carnival Corporation (the world’s biggest cruise operator) and Air Canada suffered double-digit losses along with WTI crude oil and much of the energy sector and travel industry. Vaccine rollouts and the U.S. stimulus bill are the current known-unknowns that the market is pricing in for this upcoming year, and investors will be watching to see if the dollar’s downturn will be reversed, or if the world’s major reserve currency will continue to decline in 2021. Source:  https://www.visualcapitalist.com/how-every-asset-class-currency-and-sp-500-sector-performed-in-2020/ For more postings by Virtual Capitalist, click HERE Website:  https://www.visualcapitalist.com/