2020 Winners and Losers

To say that 2020 was a crazy year in the markets is an understatement. We saw the quickest and deepest bear market decline in history, a global pandemic, trillions of dollars of global stimulus, the highest volatility (VIX) on record, negative oil prices, election chaos, and the fastest recovery from a bear market ever. And I’m damn glad it’s over.

And while the broader economy is still in a state of repair, investors finished the year in the black. The S&P 500, for example, ended with 16.3% gains, which was an above-average performance for the benchmark index.

Winning and Losing Sectors of 2020

The best and worst performing sectors generally fall into two categories: those that benefitted from COVID-19, and those that didn’t.

This massive divergence is evident in the numbers. Companies in winning sectors are often up double or triple digits – while their losing counterparts were often down double digits.

THE WINNERS

1. Software Applications
Some of the top performing companies were those that acted as enablers to remote working and ecommerce.

2. Internet Retail
While Amazon is the undisputed king in ecommerce, companies like Etsy and Wayfair also had incredible years – as did many internet retail plays around the globe.

3. Basic Materials
Materials have come back into vogue. Copper prices are at eight-year highs, and gold hit all-time highs in August 2020.

4. Freight and Logistics
The shift to ecommerce has come faster than anticipated, and companies like FedEx and UPS couldn’t be happier.

5. Semiconductors
Semiconductor companies finished as winners. The world needs more hardware to house and process the ever-expanding datasphere, and companies like Nvidia showed triple-digit gains in 2020, up 117%.

THE LOSERS

1. Oil and Gas
The oil sector was already struggling pre-COVID with price wars and a supply glut, but then lockdowns and the shutdown of non-essential travel provided another blow.

2. Diversified Banks
With record-low interest rates, shuttered physical locations, and credit risks looming from unemployed borrowers, bank stocks struggled in 2020.

3. Real Estate
Many malls have not been collecting rent checks from their tenants, creating a challenging environment for many property owners and managers in commercial real estate.

4. Airlines
It goes without saying that less flying means less revenue for airlines. But going forward, with web conferencing now the professional norm, it’s also expected that lucrative business passenger numbers will take a permanent hit.

5. Aerospace/Defense
Many aerospace and defense stocks were unable to rebound to pre-pandemic levels.

Image Source: Visual Capitalist