2023’s Biggest Losers in the Russell 1,000
While broad swathes of the equity market rose in 2023, that is not to say there were not areas of weakness. Of course there were some major spotlight stocks that investors would have completely lost their shirt on like Silicon Valley Bank had they been invested in the beginning of the year, but for those stocks still standing, below we show the 35 Russell 1,000 members that fell by at least 30% during the year. 2021 short squeeze and meme stock darling AMC Entertainment (AMC) was the worst performer on the year in 2023. Price action in the stock was actually pretty flat throughout the year up until the summer. That’s when prices plunged on news that the company would be approved to convert its one year old preferred shares to common stock and a 1-for-10 reverse split. Ultimately, AMC would go on to finish the year with an 85% loss.
One theme popping up in the biggest losers is clean energy. As EV sales decelerated last year, prices of stocks like ChargePoint (CHPT) and Lucid (LCID) hit major speedbumps, falling by 75.55 and 38.36%, respectively. Other clean energy names like Enphase (ENPH) also faced large losses.
A handful of various retailers also made the list like Petco (WOOF), Advanced Auto Parts (AAP), and Dollar General (DG). Dollar General possesses the largest market cap of those stocks, but of all the biggest losers, the vaccine makers were the largest in size. Both Pfizer (PFE) and Moderna (MRNA) fell by over 40%. In the case of PFE, the stock is now below pre-pandemic levels.
2023’s Biggest Winners in the Russell 1,000
In last Wednesday’s Closer, we noted how there was a somewhat elevated share of the S&P 500 experiencing gains of over 100%. Expanding to the Russell 1,000, there were 34 stocks with total returns of more than 100%. Two members of the Financials sector topped the list, Affirm (AFRM) and Coinbase (COIN), with gains of 408% and 391%, respectively. Two mega caps also found their ways into the top of the list in the five and seven spots: NVIDIA (NVDA) and Meta Platforms (META). One of NVIDIA’s largest competitors Advanced Micro (AMD) was also an over 100% gainer, though it falls a bit further down the list with a 127.8% gain. Other large caps like Broadcom (AVG) and Tesla (TSLA) also posted 100%+ gains.
Those semi conductor names were certainly boosted by the emergence of AI during the year, but other themes were also present among the year’s biggest gainers. For starters, cruise liners like Royal Caribbean (RCL) and Carnival (CCL) put big dents in their post pandemic recoveries with RCL even closing in on pre-pandemic highs. In spite of high rates tamping down demand, housing inventories are historically tight meaning there is an increasing importance on new inventories hitting the market. As we showed in our Annual Report, like AI, housing was also a major theme across earnings calls last year. That offers a potential boon to the homebuilders and it showed in stock performance in 2023. The homebuilder industry had strong representation with names like Builders FirstSource (BLDR), Top Build (BLD), PulteGroup (PHM), and Toll Brothers (TOL) posting over 100% gains.
2023 Russell 1,000 Average Stock Performance by Sector
2023 turned out to be a fantastic year for stocks after a horrible 2022. Below we show the average total return of all stocks in each sector of the Russell 1,000 in 2023. While most areas of the market moved higher during the year, the one area of equity markets that actually provided a negative return was Utilities. That sector’s stocks lost an average of 4.1% compared to a 20.5% average gain for the whole of the Russell 1,000. As a reminder, Utilities has the highest dividend yield of any sector, but even after factoring in those relatively high dividend yields, the average stock in the sector posted a negative total return in 2023. Consumer Staples just barely netted out an average gain, while Health Care, Energy, Real Estate, and Materials all also underperformed the broader index. That leaves Communication Services, Financials, Consumer Discretionary, Industrials, and Technology each with the average stock gaining more than 20% on the year. Given the emergence of AI in 2023, Tech was the top performer. In fact, the average Tech stock was up 43.8%, which was more than twice that of the average Russell 1,000 stock.
Bespoke’s Morning Lineup – 1/2/24 – Introducing 2024
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“Intelligence is an accident of evolution, and not necessarily an advantage.” – Isaac Asimov
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
2024 is not picking up where 2023 left off as futures are sharply lower with the Nasdaq indicated to open the year down over 1% and the S&P 500 down 0.8%. Things weren’t as bad overnight, but the sellers appeared to step in just after Europe opened for trading. While an earthquake in Japan over the weekend and geo-political concerns in the Middle East haven’t helped concerning this morning’s market picture, they wouldn’t account for such a large decline at the open. The more likely culprit is simply a round of profit-taking after a monster rally to close out 2023.
The economic calendar in the US is light today with the S&P Markit Manufacturing PMI at 9:45 and Construction Spending at 10 AM. PMI readings for the rest of the world that have already been released were generally slightly better than expected even as the manufacturing sectors for Europe’s largest economies remain in contractionary territory.
One area of the market not feeling the pressure this morning is Bitcoin. After a rally of over 150% in 2023, the world’s largest cryptocurrency isn’t skipping a beat in 2024 as it’s already up over 7% YTD and above $45K. Bitcoin traded in a bit of a sideways range from early December through the end of the year, but a rally in the first two days of the new year has helped it to clear resistance and reach new 52-week highs.
From a longer-term perspective, bitcoin is still well off its record highs from late 2021, but it has also essentially erased all its losses from 2022. There’s still plenty of overhead resistance above, but with $45K cleared, $50K, a level it has only crossed above or below 16 times, will be the next area to watch.
Sign up for a two-week trial to Bespoke Premium to continue reading more of today’s macro analysis.
The Triple Play Kings of 2023
Another earnings season is on the horizon, and throughout the reporting period, as we do each quarter, we’ll be on the lookout for opportunities from companies reporting earnings triple plays. While we’re waiting for the fresh batch of reports, we wanted to provide a quick update on triple-play trends from 2023. As a reminder, an earnings triple play is a company that reports earnings and manages to 1) beat analyst EPS estimates, 2) beat analyst sales estimates, and 3) raise forward guidance.
In 2023, there were a total of 560 earnings triple plays during the year, and the average one-day performance of the companies reporting them was a gain of 6.10%. Within those 560 reports, 32 companies managed to report three or more triple-plays, six of which had four triple-play reports in the calendar year. Below is a complete list of all the companies that fit the bill of at least three triple plays in 2023. It’s important to note that just because a company beats estimates and raises guidance doesn’t necessarily mean its stock will rally. As shown, several names in this list are down on the year, regardless of their strong earnings relative to expectations. In total, 130 of the 560 triple plays were accompanied by negative returns on the stock’s earnings reaction day.
Tech stocks had the biggest turnout on the list, accounting for over 40% of the names listed. Consumer Discretionary followed but had only half as many names as Technology (7) followed by Health Care (4), Consumer Staples (3), Industrials (3), and Financials with one. Of the fourteen tech stocks listed, four had triple plays every earnings season this year.
Two notable names on this list include DraftKings (DKNG) and Duolingo (DUOL). Both stocks were up more than 200% in 2023, and both beat EPS and revenue estimates in every earnings report of the year. If not for inline guidance once each, they’d both be joining the club of four 2023 triple plays too.
Zooming in on the six companies to report triple plays every earnings season in 2023, the triple play kings, all but one significantly outperformed the S&P 500 in 2023. Excluding Clear Secure (YOU), each of the five others at least doubled the performance of the S&P. The most impressive of course has been NVIDIA (NVDA) which ripped 239% in 2023, followed by e.l.f Beauty (ELF) which also doubled. Collectively, on an equal-weighted basis, the six stocks were up just over 100% on the year.
The chart below features points to mark each earnings report of the six triple play kings, and below that we have included a table showing each stock’s earnings reaction day performance to their report. The second quarter was particularly strong in terms of earnings day reactions as triple plays from NVDA and ELF led to gains of 24.4% and 20.5%, respectively on 5/25. Again, it’s worth mentioning that strong earnings don’t necessarily guarantee share price gains. Zscaler (ZS), although more than doubling in 2023, reported a triple play in March that resulted in an 11% pullback. On a broader scale, YOU fell more than 20% on the year despite reporting four triple plays. Not even NDVA could avoid a negative reaction to a triple play when it fell 2.46% following its last earnings report. In fact, besides ELF every one of the ‘triple play kings’ listed had at least one down day in reaction to a triple play earnings report this year.
Those were the triple-play kings of 2023. Will they retain their crowns in 2024? Or will a new crop of earnings royalty emerge to form a new empire? We’ll start to find out in the next few weeks. Happy New Year!
Our Bespoke Report – 2024 Outlook is now available for Bespoke subscribers. This report covers everything you need to know about the set-up for financial markets and the economy heading into 2024. If there’s ever a “must-read” Bespoke report, this is it!
You can read our 2024 Outlook by signing up for any of our three membership levels. Enter the coupon code “OUTLOOK” at checkout for a 20% discount on your first charge. You can review our membership levels here to help make your decision.
Bespoke Newsletter Monthly Payment Plan
Bespoke Newsletter Annual Payment Plan
Bespoke Premium Monthly Payment Plan
Bespoke Premium Annual Payment Plan
Bespoke All Access (Bespoke Institutional) Monthly Payment Plan
Bespoke All Access (Bespoke Institutional) Annual Payment Plan
Bespoke’s Brunch Reads – 12/31/23
Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market-related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.
While you’re here, join Bespoke Premium with a 30-day trial!
On This Day in History:
The Panama Canal: On New Year’s Eve, 1999, the Panama Canal, previously in US control, was handed over to Panama. The canal was originally completed in 1914 and revolutionized global trade. Cutting across a narrow section of the country, the Panama Canal became a crucial shortcut for ships traveling between the Atlantic and Pacific Oceans, reducing both time and distance for trade and military reach.
France had originally taken a shot at the project but failed before the United States under the administration of Theodore Roosevelt took over and facilitated its completion along with its management for most of the 20th century. The canal’s transfer to Panama was part of the Torrijos-Carter Treaties signed in 1977, which laid out a gradual transfer over a multi-year period. On New Year’s Eve 1999, Panama symbolically celebrated a new era of sovereignty, and the US shifted its stance on foreign policy away from direct control over international infrastructure. Since then, Panama has managed the canal and oversees upgrades and expansion projects to enhance its accommodations for larger ships and greater traffic.
Stock Market
What Did Wall Street Get Right About Markets This Year? Not Much (WSJ)
Against all predictions, the stock market had a stellar year in 2023, with major indexes reaching record highs. “I’ll be the first to admit, the stock market exceeded my expectations,” said Leon Cooperman, echoing the feelings of most investors. Factors like strong consumer spending, falling inflation, and unexpectedly resilient companies fueled the rally. While concerns remain about future recessions and high valuations, investors are generally optimistic about 2024. [Link]
Wall Street Diversification Trades Get Crushed as S&P 500 Soars (Bloomberg)
Despite softer expectations, the S&P 500 surged 24% this year as the economy remained resilient, and investors took notice of signals pointing to potential interest rate reductions. Investors have put money into ETFs tracking the S&P and other broad-market equity funds, which have experienced record inflows. In many cases, equity ETFs outperformed more tactical strategies, especially defensive ones as recession fears dominated the conversation in early 2023. [Link]
Economy
Data Quality Is Getting Worse When We Might Need the Numbers Most (WSJ)
Wall Street places a lot of importance on surveys of businesses and consumers for insights into economic trends, but the reliability of these surveys has been increasingly called into question as response rates have plummeted. As an example, the monthly Job Openings and Labor Turnover Survey (JOLTS) had a response rate of 65% in January 2014. In September of this year, the response rate was more than cut in half to 32%. with fewer respondents, comes lower quality results and a potentially misleading picture of how things look. [Link]
How Can Spending Be Up When People Feel Down? (WSJ)
The Misery Index, which combines unemployment and inflation rates, has dropped significantly due to falling inflation and low unemployment. Despite this improvement, consumer sentiment remains low. This disconnect seems to stem from a combination of factors, including political polarization, lingering inflation effects, and the lasting impact of the pandemic. While Americans may still feel downbeat, strong job growth and fading inflation could lead to improved sentiment in the future. [Link]
AI & Technology
Just How Rich Were the McCallisters in ‘Home Alone’? (NYT)
Home Alone, is a Christmas classic. The question that has been stirring on social media as the holiday season rolls around is, what exactly did Mr. McCallister and Mr. McCallister do to afford all that they had? The film takes place in a real house in Winnetka, Illinois, one of the most expensive neighborhoods in the country. The movie suggests Kevin’s mom is a fashion designer and his dad a businessman. The family’s wealth is further implied by their ability to accommodate a large number of people and the luxurious lifestyle they lead, despite not paying for their trip to Paris, which was funded by Uncle Rob. [Link]
The Ancient Origins of the Christmas Wreath (WSJ)
Wreaths are a Christmas Staple. The tradition dates back to ancient cultures, including the Egyptians, Greeks, and Romans, and served various symbolic purposes. The Vikings introduced the Yuletide wreath as part of their winter solstice celebrations, which later evolved into the Christian Advent wreath. The practice of decorating doors with wreaths gained popularity in America in the 20th century, largely influenced by Louise B. Fisher’s creative designs at Colonial Williamsburg, leading to the widespread custom of decorating front doors with festive wreaths during the holiday season. [Link]
Billionaire Endeavors
Jeff Bezos, Elon Musk say human population not nearly big enough: ‘If we had a trillion humans, we would have at any given time a thousand Mozarts’ (Yahoo Finance)
Jeff Bezos and Elon Musk, two prominent billionaires, share a vision for expanding human presence in space. Bezos, with Blue Origin, envisions a future with a trillion humans living across the solar system, facilitated by robust space infrastructure. Musk, leading SpaceX, emphasizes the need for humanity to become a multi-planet species, focusing on Mars colonization. Both stress the importance of population growth and space exploration for the future of civilization. [Link]
Immigration
A run-down motel became an accidental sanctuary for hundreds of migrants. In them, its owner found renewed purpose and meaning. (Denverite)
Yong Cha Prince planned to close her motel in Denver but found a new purpose when she sheltered Venezuelan migrants in need. The Western Motor Inn became a home for about 300 people seeking better lives in the US. It has made Prince happy to be able to care for those living at the motel, but the future of the community is uncertain due to the motel’s deteriorating condition and financial challenges. [Link]
Read Bespoke’s most actionable market research by joining Bespoke Premium today! Get started here.
Have a great weekend!
Bespoke’s Morning Lineup – 12/29/23 – Finis
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“You can’t be brave if you’ve only had wonderful things happen to you.” – Mary Tyler Moore
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
Anyone long the stock market (even small caps after the last two months) will be sad to see this year come to an end, but time moves on, and so do investors. The year ended on a positive note in Asia and Europe, but here in the US equity futures are looking more subdued. The only report on the calendar today is the Chicago PMI report for December. You may recall that last month’s report was much better than expected coming in at a level of 55.8 versus forecasts for a reading of 46.0, ending what had been an extended streak of readings below 50. This month, economists are forecasting a level of 50.0 on the nose, but if the reading can top that level it will help lend some credence to the idea that the manufacturing sector is exiting its multi-month slump.
After a rough late summer/early fall stretch, investors have had nothing but wonderful things happen to them over the last two months. At the rate this week is going, both the S&P 500 and the Nasdaq are on pace to close higher for the 9th straight week. There’s still a day left of trading, and we don’t want to jinx it, therefore, the bar for this week in the chart below is colored in light red. Since the Nasdaq’s inception in 1971, there has only been one other period where both indices had concurrent streaks of nine straight gains, and that was in late 1985 when a streak of gains lasted eleven weeks.
Looking at each index individually, returns following nine consecutive weeks of gains have generally been better than average.
For the S&P 500, there have been nine prior nine-week winning streaks since 1952 (when the five-day trading week in its current form began), and while performance over the next week was negative on a median basis, and performance was down more often than it was up, median returns for the next one, three, six, and twelve months were better than the long-term average for all periods since 1952.
While the Nasdaq has only been around since 1971, it has had more nine-week winning streaks than the S&P 500, and of the fourteen prior streaks, ten extended to ten weeks. Looking ahead, median returns over the following one, three, and twelve months were positive and better than the long-term average, but six months later, the median gain of 3.67% was well below the 6.02% average for all six-month periods since 1971.
Sign up for a two-week trial to Bespoke Premium to continue reading more of today’s macro analysis.
The Bespoke 50 Growth Stocks — 12/28/23
The “Bespoke 50” is a basket of noteworthy growth stocks in the Russell 3,000. To make the list, a stock must have strong earnings growth prospects along with an attractive price chart based on Bespoke’s analysis. There were no changes to the list this week.
The Bespoke 50 is available with a Bespoke Premium subscription or a Bespoke Institutional subscription. With Bespoke Premium, you’ll receive a number of daily market updates from us along with our weekly newsletter and a portion of our investor tools. With Bespoke Institutional, you’ll receive everything that’s included with Premium plus additional daily macro analysis and more stock-specific research.
To see all 50 stocks that currently make up the Bespoke 50, simply start a two-week trial to Bespoke Premium or Bespoke Institutional.
The Bespoke 50 performance chart shown does not represent actual investment results. The Bespoke 50 is updated weekly on Thursday unless otherwise noted. Performance is based on equally weighting each of the 50 stocks (2% each) and is calculated using each stock’s opening price as of Friday morning each week. Entry prices and exit prices used for stocks that are added or removed from the Bespoke 50 are based on Friday’s opening price. Any potential commissions, brokerage fees, or dividends are not included in the Bespoke 50 performance calculation, but the performance shown is net of a hypothetical annual advisory fee of 0.85%. Performance tracking for the Bespoke 50 and the Russell 3,000 total return index begins on March 5th, 2012 when the Bespoke 50 was first published. Past performance is not a guarantee of future results. The Bespoke 50 is meant to be an idea generator for investors and not a recommendation to buy or sell any specific securities. It is not personalized advice because it in no way takes into account an investor’s individual needs. As always, investors should conduct their own research when buying or selling individual securities. Click here to read our full disclosure on hypothetical performance tracking. Bespoke representatives or wealth management clients may have positions in securities discussed or mentioned in its published content.
Claims Characteristics Check Up
This morning’s release of initial jobless claims disappointed relative to expectations as they climbed up to 218K versus expectations for an increase to only 210K from last week’s reading of 206K. At current levels, jobless claims are rounding out 2023 in the middle of the past couple of years’ range: not as strong as the late 2022 low of 182K, but not as high as the peak earlier this year.
Before the seasonal adjustment, claims are trending higher as could be expected given the time of year. Claims jumped this week to 272.6K which is the highest level for the comparable week of the year since 2019. Based on seasonal patterns, claims tend to peak right around New Year or the first couple of weeks in January meaning that the headwinds are likely to fade soon.
Continuing claims have risen significantly since late Q3, but more recently that increase has begun to plateau right around levels from the spring peak. Currently, continuing claims stand at 1.875K, a 14K increase week over week.
In addition to weekly claims, below we show the latest data on unemployment claimant characteristics through November. As shown below, some industries that received a lot of attention for layoffs earlier this year and observed actual increases in claims, like tech, real estate, and finance, have more recently seen pivots lower in claims. Although that marks some improvements (potentially as a result of expirations of benefits), overall those industries do not account for the largest shares of claims. Instead, industries like construction or manufacturing account for greater burdens on claims.
Our Bespoke Report – 2024 Outlook is now available for Bespoke subscribers. This report covers everything you need to know about the set-up for financial markets and the economy heading into 2024. If there’s ever a “must-read” Bespoke report, this is it!
You can read our 2024 Outlook by signing up for any of our three membership levels. Enter the coupon code “OUTLOOK” at checkout for a 20% discount on your first charge. You can review our membership levels here to help make your decision.
Bespoke Newsletter Monthly Payment Plan
Bespoke Newsletter Annual Payment Plan
Bespoke Premium Monthly Payment Plan
Bespoke Premium Annual Payment Plan
Bespoke All Access (Bespoke Institutional) Monthly Payment Plan
Bespoke All Access (Bespoke Institutional) Annual Payment Plan
Bespoke’s Morning Lineup – 12/28/03 – Looking to Make a Record Run
See what’s driving market performance around the world in today’s Morning Lineup. Bespoke’s Morning Lineup is the best way to start your trading day. Read it now by starting a two-week trial to Bespoke Premium. CLICK HERE to learn more and start your trial.
“There are no traffic jams along the extra mile.” – Roger Staubach
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
It’s another slow morning in the markets as the pace of data has been slow. The only reports of note on the calendar this morning were Wholesale Inventories, which fell 0.2% on a m/m (right in line with forecasts), and jobless claims. Initial claims were slightly higher than expected (218K versus 210K) while continuing claims increased modestly to 1.875 million which was in line with consensus forecasts. Equity futures are modestly higher for the S&P 500 while the Nasdaq is indicated to open up 0.26%. There’s a small positive bias to yields, but nothing indicating conviction. One other item worth noting is that while the S&P 500 is within spitting distance of a record high, individual investor bullish sentiment declined this week falling to 46.3% from 52.9% and the lowest level since 11/23.
With just two trading days left in the year, the market is on the verge of history. After being written off for dead in the last year, the traditional 60/40 portfolio of 60% stocks and 40% bonds is within a whisker of its best two-month rally since at least 1990. The chart below shows the rolling two-month performance of a 60/40 portfolio using the S&P 500 total return as the stock portion and the Bloomberg Aggregate Bond Index total return as the bond portion. With a gain of 12.16% over the last two months, the current period just surpassed the two-month rally coming out of Covid (May 2020), and the only other period that was better for the strategy was the two months ending in April 2009. Back then, the strategy rallied 12.25%, so if the next two trading days even see marginal gains, the current rally will set the record.
What makes the current period so much different than the other two cited above is where the gains have come from. Let’s start with the stock portion of the strategy. In the current period, the S&P 500 is up 14.35% over the last two months, which is certainly strong relative to history but not anywhere close to a record. In May 2020, the two-month gain was 18.19% and in April 2009 it was 19.17%.
What has stood out in the last two months is how strong the bond portion of the strategy has been. Back in 2009, the bond leg was up just 1.87% while in May 2020 it was up 2.25%. During this current period, bonds have rallied an unprecedented 8.87% which far exceeds any other two-month period since at least 1990. Since they are meant to act as the ‘insurance’ leg in times of market weakness (although it wasn’t the case in 2022), bonds tend to always underperform stocks during periods when the equity market rallies. While they still underperformed stocks in the last two months, they have never acted as a smaller drag on the strategy during a period of strength.
Sign up for a two-week trial to Bespoke Premium to continue reading more of today’s macro analysis.