Early 2010 was marked by continued uncertainty in the wake of the Great Recession and the “Flash Crash” that spooked the markets. But in August, QE2 sparked a risk-on rally that lifted the S&P 500 from about 1,000 to more than 1,250 by year-end.
Amid a U.S. credit downgrade, the European debt crisis and a China slowdown in 2011, defensive dividend stocks had their moment. Though the broader S&P index was flat on the year, the Utilities SPDR ETF (XLU) put up 14% returns in calendar 2011 and the Consumer Staples SPDR ETF (XLP) gained almost 9% in 2011.
Then the money moved to so-called “frontier markets” in 2012. Thailand, Egypt, Turkey and the Philippines all tacked on gains of 35% or more on the year — about triple the S&P 500.
In 2013, the story returned to domestic equities — particularly the tech sector. While the markets are up strongly across the board with about 20% gains, momentum darlings like Netflix (NFLX) and LinkedIn (LNKD) have tacked on much more than that.
So what will be hot in 2014?
Well, it’s difficult to say. The U.S. economy and the stock market in general continues to muddle through the overhang of the Great Recession. The environment remains challenging for many companies, and valuations aren’t as attractive as they once were.
But while picking winners is no easy task, it’s not that difficult to see what will be ice cold in 2014. Macro trends and market pressures are already emerging that indicate these three investments are doomed in the next year.