If you condense everything about the first half of 2017, Wall Street bought the dips in China and healthcare, nibbled on some Trump inspired construction ideas, and furiously bid up the free cash flow tech giants to new heights.
While everyone was focused on Amazon, the clear breakout was BABA, gaining more than 60% for the first half — adding over $150b to its market cap. For years since coming public, Alibabba underperformed the market. I think the set up with people selling Chinese stocks heading into the New Year, fearing a trade war, coupled with their fantastic growth and size, truly gave money managers the excuse they needed to position heavily into the name.
In addition to BABA, several other Chinese related tech stocks shined, including NTES, YY, MOMO, WB and BABA competitor JD.
Both the S&P and Dow gained ~9%, while the tech heavy Nasdaq soared by 17%.
Amongst tech, none did better than large cap tech, in addition to some semis. One notable social media stock, rarely discussed, TDOC, crow-barred higher by 111%.
Here were some other bellwethers and their YTD returns: IAC +66%, NTDOY +70%, TSLA +70%, FB +31%, AMZN +30%, AAPL +25%, GOOGL +18%, MSFT +12%, NVDA +36%, ORCL +31%, AVGO +33%, PCLN +28%, NFLX +21%, PYPL +36%, CRM +27%, ISRG +47%, BBY +37%, SNE +36%.
The first half also provided some runway for some new, up and coming names in the tech space, such as W +117%, SHOP +102%, OLED +94%, SQ +72%, ANET +55%, VEEV +51%, NOW +42%, WDAY +47%, AAOI +170%, SGMS +86%, FIZZ +88%.
Think of the enormous gains in market cap some of the bellwethers just underwent. Stocks like PCLN, ISRG and AMZN continuing their torrid paths upwards, almost unabated for years. It is truly something to behold. Also, the fact that something other than biotech did well in the smaller cap names is extremely encouraging. Naturally, there were the biotech winners like KITE and PBYI, but there was also W, MBLY and STRP got bought out, 3-D stocks roared, a soda pop company nearly doubled and application software stocks defied gravity.
The Ebay spinoff Paypal broke out. Newcomers W and SHOP captivated momentum traders and a very old story stock finally did some significant business, which helped its shares double (OLED) for the half.
Commodities that enjoyed an upswing were palladium (+23%), Lithium (+19%), Timber (+15%), Wheat (+12%), Livestock (+11%), Gold, coal and copper (+7%).
On the downside were department stores (-34%), Oil and Gas (-39%), Auto stores (-27%), Home Furnishing stores (-24%), Food Wholesale (-23%).
Deflation was rampant in some raw commodities, such as sugar (-32%), coffee (-14%), cocoa (-14%), soybeans (-6%) and cotton (-5%). Natty got crushed by 28% and oil shed 14%.
Overall, the top sectors were in healthcare and tech — both sporting double digit returns. I suppose Trumpcare isn’t going to be deleterious to industry at all. In fact, based upon the +26% returns in healthcare insurance stocks for the half, they stand to make even more money.
Another interesting industry was ‘General Entertainment’, up 29% for the half. These are stocks like CCL, RCL, SIX, FUN and SNOW. People have money and want to be entertained.
Hell, even solar stocks rose by 22%.
As long as you avoided the basic material names and tried not to get sucked in on the Trump infrastructure promises that offered hope to a beguiled steel sector, you did well. Whether we can sustain these gains and add to them is another story. Often times investors like to buy beaten down sectors, while selling the winners. Let me remind you that time is a flat circle. It doesn’t abide by your calendar and offers zero correlation to dip buying adventures. More often than not, sectors that are hitting new highs comntinue to make new highs and vice versa.
Good luck in thw second half.Comments »