2020 was probably the most unusual year in the market in my 35-year career. Violent swings and a wide dispersion of returns was the norm. In the first half, 70% of the S&P component stocks were negative yet roughly 64% turned out positive, including dividends, for the full year. From the index perspective, by far the biggest news was Tesla joining the S&P 500 – as a top 10 holding based on market cap.
- If you bought the top 100 performing stocks in the S&P 500 on an equal weighted basis on Jan 1st last year and held them through the year, you would have been up 60.4%, and beaten the S&P 500 total return by 42.0%.
- If you concentrated and picked the top 10 performing stocks on Jan 1st, and again held them all year, you would have generated a total return of 136.2%, 117.8% greater than the S&P.
- If we include Tesla performance for the full year, the top 100 stock return would have grown to 67.5% while the top 10 stock portfolio would have generated an astronomical gain of 201.0%
- If instead you picked the 100 worst performing stocks for the year, you would have to mark your portfolio down 25.5%.
- If you were in the worst 10 stocks for the year, you would have to mark your portfolio down 50.7%.
The S&P 500 Index is a market capitalization-weighted index of common stocks of large capitalization companies. The data in this table was generated from the S&P website at www.spindices.com and Refinitiv, www.refinitiv.com. The calculations from this data were performed internally. Perkins Fund Marketing LLC believes that such information is accurate and that the sources from which it has been obtained are reliable. The Firm cannot guarantee the accuracy of such information and has not independently verified the assumptions upon which such information is based. The commentary should not be considered as any form of an investment recommendation. Past performance does not guarantee future results. Future returns will likely vary, and investment results will fluctuate.
In 2020, some investors were rewarded for their patience as they saw their investments perform poorly over a few brutal months of the first half only to come roaring back and finish the year strong. Other investors were rewarded for taking quick action to move away from COVID ravaged businesses and lean into more opportunistic holdings.
With 2020 truly behind us, we look forward to 2021 and welcome the opportunity to speak with you.
Best wishes to all and stay safe.
J. Douglas Newsome, CFA
Managing Director, Director of Research
Perkins Fund Marketing LLC