Sanjib Saha
29 December 2023
It’s hard to believe that 2023 is almost over. As we get ready to welcome the new year, here are a few trivia facts about how the US large company stocks did this year.
- After a disastrous show in 2022 and dropping by almost 20%, the S&P 500 Index has gained almost 25% this year. Investors who stayed course are handsomely rewarded for not panicking or switching to safety of cash/CDs offering juicy interest rates.
- While the S&P Index is yet to surpass its record close figure from December 2021, it’s total return reached an all-time high a few weeks ago, thanks to the ongoing dividends reinvested.
- Three out of twelve market sectors ended in the red – Utilities, Energy and Consumer Staples. Health Care sector barely moved. Information Technology led the pack, as it has done over the last 5 and 10 years.
- A whopping 70% of the S&P 500 companies underperformed the Index, underscoring the dangers of stock picking vs passive investment.
- Over a third of the companies ended in red and lost value compared to the start of the year. Two familiar names from the bottom five companies are Moderna and Pfizer, both losing over 40% during the year.
- A dozen companies from the top performers saw their market price more than double this year, with Nvdia and Facebook taking the Gold and the Silver places respectively. Both these companies tripled their value from the start of the year. The bronze goes to cruise operator Royal Caribbean.
- Within a span of slightly over 5 years, the number of Trillion-dollar US companies reached from zero to five. Apple is the only one crossing the 3T dollar mark, with Microsoft not far behind. Google, Amazon and Nvidia – the newest entrant to the club – are below the 2T dollar milestone. Facebook, Tesla and Berkshire Hathaway seem to be the closest contenders to this exclusive club.
While it’s interesting and amusing to read these trivia bits, the stock market performance for a single year doesn’t tell anything. Stocks are for the long run. American large companies are enjoying stock market dominance for over a decade, and investors have benefited from the rise. If you started your first investment in November 2017 or earlier, you doubled your money in 6 years. If you started in May 2014 or before, your initial money tripled in less than 10 years. Your investment in December 2012 has quadrupled by now. Looking a few decades back, money invested in January 1997 has grown 10 times. There were four bear markets in this period, including two where markets lost half or more. The ride wasn’t fun, but the reward at the end for bearing the pain is substantial.