What the Best/Worst Stocks of 2020 Can Tell Us
Longer-Term Trends That Could Impact the Next Couple of Years
Let’s be honest—2020 delivered one of the most surprising years in recent stock market history. While most of us are glad to leave 2020 behind, the year’s performance for major U.S. indices was nothing short of impressive.
Despite widespread uncertainty, the markets remained strong, even during some of the most turbulent months of the year. Few could have predicted that:
The Dow Jones Industrial Average (DJIA) would rise 10.2% in Q4 and end the year up 7.3%
The S&P 500 would rise 11.7% in Q4 and finish the year up 16.3%
The NASDAQ would gain 15.7% in Q4 and close the year up an astounding 43.6%
As we move into 2021, conversations around whether we’re in a stock market bubble are heating up. Some experts believe caution is warranted, while others see room for continued growth. The debate divides even the brightest financial minds.
Rather than diving into the bubble debate, let’s take a step back and look at the longer-term trends that may shape the markets in the years ahead. Has COVID-19 permanently changed certain industries? Can the best and worst performers of 2020 offer clues about the future?
Best and Worst DJIA Stocks of 2020
Roughly two-thirds of DJIA stocks posted positive returns in 2020, but the gap between the best and worst performers was significant.
Company 2020 Total Return Apple Inc. +82.3% Microsoft Corporation +42.5% Nike +41.0% Salesforce.com Inc. +36.8% Caterpillar Inc. +27.0% Merck & Co. Inc. -7.2% Intel Corporation -14.7% Chevron Corporation -26.0% Walgreens Boots Alliance -29.4% The Boeing Company -33.9%
Best and Worst S&P 500 Stocks of 2020
The performance gap in the S&P 500 was even more extreme, with results that some might argue defy logic.
Company 2020 Total Return Tesla +743.1% Etsy +301.6% Nvidia +121.9% PayPal +116.5% L Brands +105.5% Marathon Oil Corporation -51.1% TechnipFMC PLC -56.1% Norwegian Cruise Line -56.2% Carnival Corp -57.2% Occidental Petroleum Corp. -57.7%
We Know What Happened
The COVID-19 pandemic sent shockwaves through global markets in early 2020, effectively freezing large parts of the economy. As businesses and schools shut down, many people shifted to remote work and online shopping, while industries reliant on physical presence—like restaurants, cruise lines, and airlines—suffered steep losses.
Now, with vaccine distribution underway, we have to ask:
Are these short-term shifts, or are they permanent changes?
And more importantly—what should we do about it?
What to Do Now
The answers to these questions are personal, and your next steps will depend on your perspective and individual circumstances. At NEST Financial, we encourage you to think beyond investing when planning for the future.
Here are a few things to consider:
Is your home equipped to support remote work long-term?
Do you have enough cash reserves to weather an emergency?
Are your estate planning documents up to date?
And if you’re thinking about adjusting your asset allocation to reflect potential long-term trends, give us a call. We’re here to discuss your options and help you align your strategy with your financial goals.