Continuing with my 2022 year-in-review series (first post), let’s take a look at U.S. sectors and industries (Exhibit 1). Former darlings in Internet, Consumer Discretionary, Semis and Retail all declined over 30% last year. Tech, homebuilders and real estate didn’t do much better. The stars of 2022 sector show were energy stocks with XLE up 64%! Steel also had a strong rebound. Classic defensive sectors of utilities, consumer staple and healthcare were flat as talk of imminent recession dominated the news flow. Even after a rough year technology and other 2022 dogs still have stellar 10-year returns while the energy winners are still far behind on the longer timeframes. This may mean that the current sector rotation pattern has some legs (or not).

Exhibit 1 – 2022 Performance for Domestic Sectors & Industries

Let’s also take a look at some individual stocks. Exhibit 2 shows 20 best performing companies in the S&P 500. It’s pretty much ALL energy with couple of solar plays and a steel maker. Remember when Zoom had a larger market cap than Exxon (they crossed around $140 billion back in 2020)? Well, XOM is now worth $463 billion versus $20 billion for ZM. Surprisingly, there are also couple of medical distributors on the list driven by name-specific fact0rs.

Exhibit 2 – 2022 Top Performing S&P 500 Stocks

The worst 20 stocks in the S&P 500 are shown in (Exhibit 3). This list is a hodge podge of stocks from all corners of the market and, unlike the winners, there is no consistent theme here. There is a generator company, a dating site, few banks, PayPal, several media companies, travel/gaming stocks, etc.  There are two notable giants that fell from grace in 2022 – Tesla and Meta (formerly Facebook). Both had market values of over a trillion dollars at one point but have since dropped into the $300 billion range. And these are the blue chip names – there are plenty of former high flyers that dropped 80%+ last year – Lucid, Rivian, Coinbase, Snapchat, Wayfair, Peloton, etc., etc. The moral here is that you need to be very active in watching your big winner lest they roll over hard and lose everything. That’s why indexing works so well over the long run.

Exhibit 3 – 2022 Bottom Performing S&P 500 Stocks

On the international front, USA’s 18% loss put it in the middle of the pack. Russia’s stock market completely self-destructed when its invasion of Ukraine triggered western economic sanctions. RSX which held US-traded Russian stocks just liquidated and lost 100% of its value. Still painful but less severe were losses around Asia (Vietnam, Taiwan, China, South Korea), Middle East and Europe. Best performers were Turkey (+106%!), Chile, Brazil, Argentina, Greece & Peru.

But then again, if we look at 10-year returns, US is still the best by far. However, there seems to be a distinct change in relative performance of US and foreign stocks that started in November 2022 and coincided with the peak of US Dollar. Whether this is a start of a new trend or just a short-term blip remains to be seen, but I’ll definitely be keeping an eye on it.

Exhibit 4 – 2022 Single Country Performance

I’ll finish the annual reviews by looking at the economic numbers when GDP is released at the end of next week.