A number of factors are lining up to make 2020 one of the most exciting times I’ve ever seen in the market. It’s going to keep everyone on their toes, that’s for sure.
Earlier in the week, we talked about how the U.S.-China trade war could impact stocks. We also discussed what might happen if Elizabeth Warren is elected president.
Today, I’d like to turn to the sectors to watch in 2020.
Investing in the right sectors is really crucial for your portfolio returns, as I’m sure you’ve found – and the chart I’m about to show you proves that.
Take a look below at what happened to energy stocks compared with the S&P 500 since 2015.
The S&P 500, which has grown to be dominated by tech behemoths like Microsoft (MSFT), Apple (AAPL), Amazon (AMZN), and Facebook (FB), returned 50% for investors.
On the other hand, the Energy Select Sector SPDR Fund (XLE), which tracks oil giants like Exxon Mobil (XOM), Chevron (CVX), ConocoPhillips (COP), Schlumberger (SLB), and more, fell 27% over the same timeframe.
Then there’s biotech.
From July 2010 to July 2015, stocks tracked on the S&P 500 biotech index soared more than 400%, with individual firms like Gilead Sciences (GILD) and Regeneron Pharmaceuticals (REGN) seeing even bigger gains.
But all that changed as the ramp up to the 2016 presential election started and Hilary Clinton began talking about price hikes for pharmaceuticals in the wake of scandals surrounding firms like Valeant Pharmaceuticals – now Bausch Health (BCH) – and Turing Pharmaceuticals.
Folks mostly steered clear of the sector for the past four years or so. The industry bellwether exchange-traded fund (ETF), the iShares Nasdaq Biotechnology ETF (IBB), went nowhere.
But notice what’s been happening recently. We’re starting to see signs of life again in biotech stocks.
It’s not surprising when you consider the countless innovations taking place in healthcare and medicine.
For the most part, these technologies have been buzzwords for many years, but they are finally starting to make a meaningful impact on our daily lives.
We’re also seeing another hostile political environment leading into the 2020 presidential election season, which could help tilt the sector one way or the other.
Another asset class to keep an eye on in 2020 is small caps.
The S&P 500 reached new highs in October, and the Dow Jones Industrial Average and the Nasdaq rose to new peaks in November. But smalls caps lagged their larger cousins.
Conditions have changed. The Russell 2000 index includes the smallest companies by market cap and is often used as a bellwether that tracks the overall performance of the economy. On November 25, the index climbed 2.1% and hit a new 52-week closing high.
Now, as I look ahead to 2020, I’ve done the hard research, read the charts, talked with industry leaders, and formed a view on what’s coming next.
Are investors becoming comfortable with more risk, and potentially greater returns, that can be found in small-cap firms?
And what could happen to drug prices if Republicans, or Democrats, win the 2020 elections?
I’m about to lay it all out for you in the Early Warning Summit 2020 on December 10.
And don’t forget: Sector performance is one thing, but choosing the best stocks that are poised to soar into the stratosphere next year is another.
This important summit is coming soon, so don’t forget to sign up now.
P.S. I see 2020 as a critical year in the market. There are several headwinds converging at once, and they will drastically impact the share price of virtually every stock.
A lot of investors are going to get caught off guard, but I don’t want that to be you.
Next Tuesday, December 10, at 7 p.m. ET, I’ll show you what’s going to happen and how you can use it to potentially make a fortune. It’s free to attend. All you have to do is click here to sign up now.
Matt McCall’s MoneyLine Podcast
Click here to listen to Matt McCall’s MoneyLine podcast! This week, Matt talks about the Russell 2000. The small-cap index rallied to a new 52-week high, trigging a great buy signal. And a small, unknown recent IPO joined the small caps in breaking out. Then, Matt takes a look back at the biggest winners of the last decade.
You can subscribe to this podcast on iTunes, Stitcher, Spotify, or wherever you listen to podcasts.
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