U.S. equity markets flip-flopped today as investors pivoted back to big tech and stay-at-home stocks, abandoning value and recovery-related sectors for the first day in four. Apple (AAPL) gained 3%, Microsoft (MSFT) was up by 2.6%, Netflix (NFLX) climbed 2.2%, and Facebook (FB) and Amazon (AMZN) rose 1.5% and 3.4%, respectively. These stocks are heavy and they carried the market-weighted S&P 500 to a 0.77% gain on the day.
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2020 has been a good year for diversification as market leadership has shifted several times amid the pandemic. It's also been a good year for global diversification as many markets have taken their turns in the lead for performance. As it turns out, the last decade has been a good reminder of the importance of looking globally when building a portfolio. The best performing stock market since 2010 may surprise you (more below).
The last two days of positive vaccine news are emboldening investors to dive back into risk, despite the alarming rise of COVID-19 hospitalizations and cases — especially in the U.S. Investment banks and money managers are raising their 2020 and 2021 forecasts for both GDP and S&P 500 growth. They are betting on science, medicine, and these companies to bring us into the light.
High Times Down Under
Lost in the noise around the U.S., European, and Asian equity markets is the consistent and notable performance of New Zealand's equity market. It has outperformed all other single-country markets within the S&P Global BMI (Broad Market Index) over the past decade, delivering a 14.4% 10-year annualized return.
That's better than the U.S. (+13.3%) and far better than China (+6.6%) since 2010. Denmark ties the U.S. for the second-best annualized returns after the Kiwis.
New Zealand's economy, unlike Australia's, is not heavily dependent on energy production and mining. It is powered by exports of wool, agricultural products, and paper, as well as tourism. Like all countries, it was severely impacted by COVID-19 and fell into a steep recession in the second quarter. It vaulted out of that following strict lockdowns over the summer and has been able to keep the virus relatively under control.
In the past month, it has gained nearly 3%, besting the U.S., Europe, and India, but trailing China. Diversification means also looking globally for returns.
Billionaires Let the Good Times Roll
It's a good time to be a billionaire — not that there is ever a bad time. But 2020 has been especially benevolent to the high rollers as many have seen their fortunes skyrocket amid the pandemic.
According to the Bloomberg Billionaires Index, five of the world's billionaires are now worth over $100 billion each.
Jeff Bezos leads the pack with $179 billion. He's only added $64 billion to his account this year as Amazon has dominated amid the pandemic. The top 10 billionaires, except for Warren Buffett and Bernard Arnault, have all had a very good year.