As with any year, 2019 had several surprises – both positive and negative – that impacted the investment markets. But what stood out for many people is the fundamental backdrop. For one thing, this was the year where we closed out not just another calendar but an entire decade.
More importantly, several domestic and geopolitical factors weighed on both major indices and individual hot stocks. Obviously, the biggest concern that most market participants had was the U.S.-China trade war. For a year-and-a-half period, the trade dispute between the world’s biggest economies teased and rattled investors. Not until recently did the two nations come together for a limited deal.
Related to this narrative was President Donald Trump’s reelection bid. Although not popular overall, Trump still has strong support within his conservative base. And there’s reason to believe that as long as he can keep the economy moving in the right direction, he has a legitimate chance of winning a second term.
Understanding this point, the President has consistently pressured the Federal Reserve to slash interest rates. Although the administration is not getting the magnitude of cuts that it wants, the Fed is nevertheless playing ball. And because the central bank has adopted a generally dovish view, this strategy sparked its own surprises.
Additionally, we saw some dramatic individual performances in hot stocks of various industries as well as startling implosions. With a new year and new decade just over the horizon, let’s take a look back at some of the biggest investing surprises of 2019.
Advanced Micro Devices (AMD)
I remember a time earlier this decade that analysts would often laugh at the thought of Advanced Micro Devices (NASDAQ:AMD) staging a comeback. Now, not too many folks are laughing. Not only was AMD stock one of the biggest surprises of 2019, I think it’s one of the biggest surprises of the decade.
In January of 2010, AMD stock traded hands in high single-digit territory. Today, shares have cleared the $40 level. But it’s not merely the skyrocketing price point that has captured investors’ attention. Rather, Advanced Micro has rid itself of the image of being a poor man’s Intel (NASDAQ:INTC). Currently, AMD is competing in the premium processor space, giving its well-heeled rivals headaches.
Despite the enormous enthusiasm, the markets tend to be cyclical. As such, I’m a little bit skeptical about whether AMD stock has more juice in the tank. It could, but no stock rides a perpetual bull market.
Aurora Cannabis (ACB)
If AMD is emblematic of a positive surprise, Aurora Cannabis (NYSE:ACB) fits the bill for a negative one. No matter where you stand in the marijuana legalization debate, the cratering of this once-proud weed giant is shocking. At the beginning of 2019, ACB stock closed at $5.24. Nearing the end of the year, ACB is trading well under $3.
Even more disconcerting, ACB stock briefly touched double digits in March. However, as with virtually all other cannabis plays, Aurora Cannabis shares began to tumble in late spring. By late summer and early fall, the acceleration of negativity devastated the green industry.
What’s surprising here was how unforgiving Wall Street was to the sector. Although the cannabis industry offers an unprecedented revenue stream – previously, cannabis was largely illegal in North America – individual companies failed to deliver hard results.
That said, I have a contrarian viewpoint on ACB stock. Eventually, the Canadian market will get its act together. Plus, a not-too-crazy pathway for U.S. legalization exists. Besides, how low can shares go?
China’s flagship company Alibaba (NYSE:BABA) surprised the heck out of many investors primarily because of its resilience against geopolitical headwinds. In the latter half of 2018, BABA stock tumbled badly as the U.S.-China trade war first started to get ugly.
Furthermore, China is mostly an export-driven economy. As much as the Communist Party loves to spout its nonsensical propaganda, China needs a positive relationship with the U.S. For the first time, Chinese President Xi Jinping met someone in Trump who was not going to kowtow to anybody.
Honestly, I think the higher ups in the Asian juggernaut’s government were surprised at Trump’s resolve. Similarly, I was taken aback about how quickly BABA stock recovered its second half of 2019 losses. With positive developments in the trade war arena, it appears Alibaba will be a top pick for 2020.
Still, a word of caution: President Trump cannot afford to make key concessions to his Chinese counterpart. Therefore, I don’t think this issue is closed.
Although a contentious pick for one of the biggest investing surprises of 2019, I nevertheless include Netflix (NASDAQ:NFLX) because many were surely caught off guard with the streaming giant.
Over the last several years, NFLX stock represented disruption of the old guard of entertainment. Once a technological novelty, many households quickly transitioned to the streaming platform. As they did, they created a new phenomenon known as cutting the cord from tethered (traditional) pay TV.
In fact, this is one of the biggest disruptions in tech, leaving media giants scrambling for an answer. But in 2019, NFLX stock received a taste of its own medicine. This is the year when Netflix no longer was the only viable content streamer, with Disney (NYSE:DIS) in particular entering the space.
But as popular as Disney’s streaming platform Disney+ is, I think it leaves an opportunity gap for adult-geared content. Therefore, don’t be surprised if NFLX stock makes a surprise performance in 2020, this time for the positive.
When it comes to disruption, few can hold a candle to Uber (NYSE:UBER). Quite simply, the company introduced the concept of ride sharing. Prior to this platform, people who wanted private transportation had to resort to taxis, which are slow and expensive services.
Therefore, when news came that UBER stock would launch in May of this year, investors were excited to see what it could do. Fundamentally, Uber and rival Lyft (NASDAQ:LYFT) convinced an increasing number of Americans to try their brand of transportation. At first, shares moved forward as you might expect.
However, Wall Street quickly questioned the longer-term viability of UBER stock. For instance, the company’s bottom line is awash in red ink. If that weren’t enough, a shocking explosion of controversies rippled across headlines.
Despite many ugly headwinds impacting UBER stock, I keep coming back to one question: who’s going to replace it? I just don’t see a realistic answer. Therefore, I’m inclined to believe in the contrarian case for UBER in 2020.
Kinross Gold (KGC)
Throughout most of the 2000s decade, gold bullion was in vogue. Everyone from seasoned financial analysts to televangelist Pat Robertson was hawking the yellow metal. At first glance, the shift to precious metals made sense. After all, the Sept. 11 terrorist attack caused fear and panic, likely fueling the modern gold rush.
Naturally, the rush to the metals lifted mining companies like Kinross Gold (NYSE:KGC). That was fine during the bull market. But early in the 2010s decade, gold prices peaked and later crumbled. So did KGC stock.
Eventually, by the middle of this decade, KGC stock would trade in the doldrums. And by that, I mean less than $2.
When 2019 rolled around, few people were interested in precious metals. But later in the summer, the sector experienced a big rebound, taking KGC stock along for the ride. I’m still excited to see what the future holds for the metals and the miners. With a contentious election on the way and lingering geopolitical uncertainties, nothing glitters like gold.
Altria Group (MO)
Ironically, 2019 may go down as the year of the vaporizer or e-cigarette. It’s no surprise that over the years, tobacco companies like Altria Group (NYSE:MO) suffered market value declines: basically, Americans are smoking less. And it’s also no surprise that in order to bolster MO stock, Altria bought out a major stake in popular e-cigarette Juul.
If you look at the vaping landscape, this is an arena dominated by small businesses. Given this backdrop, industry players worked hard not just for their own sales but to increase visibility. Well, they got the visibility, but it was unfortunately the wrong kind.
A wave of mysterious, supposedly vaping-related illnesses and deaths riveted and horrified the nation. The matter even went up to the White House, with President Trump threatening a flavored vape liquid ban. Logically, MO stock took a beating.
However, I believe the hysteria around the so-called vaping crisis is exaggerated, especially without an established root cause. Furthermore, the rate of illnesses and deaths have peaked, which may augur well for MO stock.
Can a company represent one of the biggest investing surprises if no one really knows about it? For consumer electronics giant Sony (NYSE:SNE), I believe we should make an exception.
As Japan’s flagship organization, Sony hits its cultural peak in the 1980s with the iconic Walkman. But in the 1990s – notwithstanding the extreme bullishness in SNE stock during the tech bubble – the company started to lose a little bit of its edge. And by the 2000s, rivals encroached in Sony’s space with mind-boggling innovations.
This decade, SNE stock has been all over the map. Further, when people talk about innovations in consumer tech, they’re not talking about Sony. However, these critics may want to change their tune.
Out-of-the-box thinking, such as Sony’s foray into business-to-business wearables sales have helped change the company’s image. Plus, Sony has viable business units, such as its incredibly popular PlayStation gaming console.
Oh yeah, SNE stock is up nearly 40% year-to-date. Has the company finally turned the corner? Considering again the cyclical nature of the markets, I wouldn’t be surprised to see Sony maintain its momentum into 2020.
As of this writing, Josh Enomoto is long gold bullion and SNE stock.