Every year, investment publications have some fun and show investors just how strong their returns could have been had they had the foresight to invest in some of the best-performing assets. Investing with the benefit of perfect hindsight isn't possible since investing must first be done before returns are known, but looking in the rearview mirror can help provide insight into prospective asset performance. Below are five strong investments so far this year.
Investors who have not invested in tech giant Apple, Inc. (Nasdaq:AAPL) so far in 2012 have missed out on huge investment gains. The stock is up around 55% so far this year and was up approximately 70% prior to a recent pullback. This continues a multi-year run. Over the past five years, the stock is up more than 275% and has pummeled the overall stock market return, which has been slightly negative. The million dollar question is, of course, whether Apple's rally will continue. For now, the popularity of its iPhone, iPad and extensive app catalog is a competitive advantage that rivals have been unable to eat into with much success.
Investors, as well as some of the largest banks in the country, are calling a bottom to the housing market. The market had been in free fall since around 2006, which counts as the peak of the housing bubble. Third quarter earnings from large banks, including JPMorgan (NYSE:JPM), Bank of America (NYSE:BAC) and Wells Fargo (NYSE:WFC) have seen large rises in home refinancing fees, which stems from record-low interest rates and housing values that are now seeing slight upticks in prices. The best performing homebuilding stock so far in 2012 is PulteGroup (NYSE:PHM); its stock is up approximately 150%. The iShares Dow Jones U.S. Home Construction ETF (ARCA:ITB) is also up an impressive 64%, to indicate the market is improving markedly overall.
These days, institutional shops are touting volatility, as measured by the VIX index as its own asset class. The Volatility Index, or VIX, is the ticker symbol for the Chicago Board Option's Exchange index that tracks the market's expectation for volatility over the coming 30 days. The ability to predict what volatility is going to be on any given day or over the long haul remains suspect, but investors lucky enough to bet on decreased volatility so far in 2012 have more than doubled their money. The VelocityShares Daily Inverse VIX ST ETN (ARCA:XIV) has returned approximately 165% this year to date.
Though not mentioned often, the biotechnology industry has put in a strong showing so far this year. The ProShares Ultra Nasdaq Biotechnology (Nasdaq:BIB), which adds some leverage to boost returns on the biotech index, is up more than 80% so far this year. Some of the larger biotech names, including Amgen (Nasdaq:AMGN) and Biogen Idec Inc. (Nasdaq:BIIB), are both up around 35% in 2012 to handily beat the market return of closer to 15%.
Looking at a specific foreign market that has performed well so far this year, the Market Vectors Egypt Index ETF (ARCA:EGPT) is up approximately 60% in 2012. Political instability remains, but there are other areas in the region that remain far less stable. Egypt's strong run demonstrates the positive returns that can come with timing the end of geopolitical conflict in a country. Greece remains a work in progress, but favorable developments could mean potentially outsized returns for brave investors betting on a recovery.
The Bottom Line
Of the above assets, Apple and the homebuilding markets could continue to do well for the remainder of the year. Calling short-term market movements is as much luck as skill, but can work out quite well for investors who end up on the right side of the call.
At the time of writing, Ryan Fuhrmann owned shares of BAC since 2011, JPM since 2011 and WFC since 2007.