Continuing with my 2023 year-in-review series (first post), let’s take a look at U.S. sectors and industries (Exhibit 1). Homebuilders led the market in 2023 with 69% return, including 30% in the fourth quarter alone. Is housing market a total mess, you might wonder? Why, yes, it is, but homebuilder played it right last year keeping inventory low, pricing high and offering buydowns on all-important mortgage rates.  Semiconductors and other tech stocks weren’t far behind largely driven by AI mania (Nvdia’s 240% return being case in point).  Industrial and material did pretty well. Even financials, in spite of a mild banking crisis early in the year, returned a respectable 12%. The crisis was more fully reflected in a narrower Regional Banks ETF that dropped 8%. Defensive sectors were left behind as animal spirits were on full display.

Exhibit 1 – 2023 Performance for Domestic Sectors & Industries

Let’s also take a look at individual stocks. Exhibit 2 shows 20 best performing companies in the S&P 500. Nvidia and Meta had huge bounces after being left for dead in 2022. Two cruise lines also had stellar returns, as did several homebuilders. Of the 20 companies shows, 12 were in the technology sector and 4 consumer cyclicals. Blackstone was the lone financial company on the list as Private Equity space continued to heat up.

Exhibit 2 – 2023 Top Performing S&P 500 Stocks

The worst 20 stocks in the S&P 500 are shown in (Exhibit 3). All kinds of stories on this list and you have to screw up pretty badly to be down this much when the market is up 25%!  Seven healthcare companies are coming off COVID-era highs, although many more are doing great with the new class of weight loss drugs (Eli Lilly’s 60% jump wasn’t enough to make it on the list above).  Several utility and packaged foods companies are also there. Hard to see other themes, mostly company-specific issues.

Exhibit 3 – 2023 Bottom Performing S&P 500 Stocks

On the international front, major (and some minor) country performance is show in Exhibit 4.  There are a lot of head-scratchers near the top. Isn’t Argentina a total disaster with imploding economy and an eccentric new president (and that’s putting it very mildly)? Isn’t Poland on the border with war-torn Ukraine and first on the line if things escalate? Greece and Mexico. really? Taiwan potentially on the verge of Chinese invasion? Beats me. Very good illustration of why we don’t invest tactically – none of this should be happening based on common sense and conventional wisdom. On the bottom, there is a slew of Asian countries as well as Turkey, New Zealand and Israel.

Exhibit 4 – 2023 Single Country Performance

I’ll finish the annual reviews by looking at the economic numbers when Q4 GDP is released in couple of weeks.