There weren’t many losers in the stock market in 2017. Winners abounded in a global stock market that posted an average gain of better than 21%. Purely for the sake of balance I have titled this story, “2017 Stock Market Winners and Losers.”
So let’s start with the winners!
By winners, I mean stocks or sectors that managed to exceed the already impressive performance in the market as a whole. With all three major U.S. indexes up more than 20% last year, the chances are good that if you invested in 2017, you profited. If you invested in one of the following stock market winners, you really profited.
Stock Market Winner: Square, Inc. (SQ)
With a 2017 return of better than 150%, Square takes the green jacket from Nvidia (NVDA) as last year’s best-performing large-cap stock. A digital payment company that primarily serves small- and mid-sized businesses, Square is growing along with them.
The only, and I repeat, the only flaw I can see in this stock is that few investors know about it. Yet, it is making money hand over fist behind the scenes and it has been for years.
Why, long before COVID-19 hit, this stock was on a tear, handing investors 100% more profits than Amazon, Apple, Facebook and Google—that’s 230% to 76%, 105%, 16% and 32%, respectively.
This company’s market leadership will continue for years to come.For details, click here.
In the last quarter alone, the company’s customers processed $17.4 billion of orders, up 31% from the year before. Of that total, 52% came from customers that process less than $125,000 per year, with just 20% processing more than $500,000 annually (though that figure is up from 14% in the previous quarter).
Basically, as Square’s customers grow, so does Square’s top line. And lately, so has SQ stock. Matching its 2017 return in 2018 will be darn near impossible. But after some early growing pains when it came public in 2015, SQ should still have plenty of room to run.
Just like a top performer of 2016, Nvidia, Square was featured in Cabot Top Ten Trader at the beginning of the year, and subscribers who followed our advice grabbed quick 117% gains. To learn more about Cabot Top Ten Trader, click here.
Stock Market Winner: Tech Stocks
With Square leading the way, no sector had a better year than technology. Liquid leaders such as Alphabet (GOOG) (+33%), Amazon.com (AMZN) (+57%), Apple (AAPL) (+45%) and Netflix (NFLX) (+55%) also had great, market-beating 2017s, pushing the Nasdaq to a 26% gain for the year. From a value perspective, the sector looks pretty stretched out. But momentum is a powerful thing in the stock market. Don’t expect an immediate comeuppance for technology stocks in 2018 due simply to the law of averages.
Stock Market Winner: Housing Stocks
The U.S. housing market continues its post-recession recovery, propping up homebuilder stocks, home improvement companies, REITs and every part of the housing sector. Home Depot (HD) (+41% in 2017) remains a steady grower and reliable dividend payer, and Lowe’s (LOW) (+31%) wasn’t far behind. Meanwhile, construction stocks like PulteGroup (PHM) (+82%) and Toll Brothers (TOL) (+56%) performed even better as single-family homebuilding reached a 10-year high.
Stock Market Winner: Emerging Markets
According to Yardeni Research, Inc., emerging markets stocks had an average return of 33.8% in 2017. Argentina’s Merval led the way with a 77% return, while smaller markets like Kazakhstan, Ghana and Vietnam all hovered near the 50% mark. Those emerging markets are fairly obscure and, with the exception of Argentina, are difficult to take advantage of if you’re a U.S. investor. But they show that nearly a decade removed from the global recession, the world economy is demonstrating some real growth, and the less developed nations are leading the way.
Subscribers to Cabot Global Stocks Explorer enjoyed a great year, doubling their money and grabbing quick gains in 2017. The market’s trend is still up, and it’s not too late to take advantage of it. Click here to learn how.
Stock Market Loser: Commodities
Like I said, there weren’t many stock market losers in 2017. And when times are good for the market, traditional safe havens like gold and silver typically struggle. Sure enough, gold stocks (+11%) underperformed and silver miners traded roughly flat.
And while crude oil prices swelled in the last few months, energy stocks continued to languish in 2017. The Energy Select Sector SPDR ETF (XLE) was down 4% last year despite a late rally fueled by $50-plus oil prices.
Which brings me to my second and final loser …
Stock Market Loser: Conservative Investing
Volatility, as measured by the VIX, hit multi-decade lows in 2017. Markets around the world prospered. U.S. unemployment is down to 4.1%, and corporate earnings have grown substantially for three straight quarters. If you invested conservatively this year—loading up on gold and silver stocks, big-oil companies or low-beta dividend payers in preparation for a seemingly inevitable market correction—you missed out on an amazing rally!
And while a short-term correction is bound to come in 2018, the long-term picture for investors looks increasingly bright. If you missed out on the bull market in 2017, don’t make that mistake again in 2018!
If you need a little help in the new year, Cabot Growth Investor will guide you to the best stocks in this bull market. In 2017, our portfolio doubled the return of the S&P 500 and our readers grabbed quick double- and triple-digit gains in many of our stocks. So don’t miss out in 2018!
Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.Sign up now!