Investment

I admit it — these are my 5 dumbest investment calls of 2020 – MarketWatch

Published

4 years ago

December 16, 2020

Since 2017, I’ve made it a point to end each year on MarketWatch by recapping my predictions and investment advice. And perhaps unsurprisingly, the most amusing part for folks (including myself) is observing at how off-target some of those calls were.

Like any pundit, I’d prefer to think I get more things right than wrong. Like in May, I told folks Tesla’s run was far from over. Shares are up about 300% since then. I also highlighted the growth potential of dynamic small-caps, including Celsius Holdings
CELH,
+10.25%,
which has soared 500% since my recommendation, and Overstock.com
OSTK,
+5.09%,
which has jumped almost 300%.

But all Wall Street analysts think they’re pretty hot stuff, so I won’t bore you with supposed proof of my competence. Instead, let’s get right to the good stuff — my five dumbest pieces of advice from the last year.

Doubting the COVID (market) rebound: I was very reluctant to trust the quick snap-back for markets in March and April, particularly given early predictions that the pandemic could suck $1 trillion out of the global economy. But I made the mistake of thinking about the implications for regular folks and small businesses — not the stock market.

The hard reality is that poor people have been hit hardest by the pandemic, but poor people don’t own stocks. Similarly, megacap corporations are just fine even as small stores and restaurants have been forced to close. White-collar employees continued to get their 401(k) match, and structural factors that overweight well-off tech firms in indexes like the S&P 500
SPX,
+0.18%
added to momentum for stocks even as the economy suffered very real damage.

The bottom line is a brutal reality that I often have trouble acknowledging: Wall Street is fundamentally divorced from the real U.S. economy, and it’s perilous for investors to conflate the struggles of regular Americans with the performance of the S&P 500. As depressing as that is to admit, COVID-19 proved once again how true this is.

Betting against bitcoin: In February, I warned that bitcoin was having a moment but could run out of gas and disappoint supporters yet again in 2020. But the cryptocurrency
BTCUSD,
+0.72%
continued to outperform traditional financial assets in 2020, roughly doubling to $20,000 since my column.

That’s in part because of folks looking for alternative assets out of a fear that a pandemic-driven economic crisis would hit, but also because of continued institutional demand as bitcoin continues to mature and win legitimacy as a viable asset in the admittedly volatile world of crypto.

Giving up on oil stocks: After the stars aligned to briefly drive oil prices negative in early 2020, it seemed a terrible idea to go hunting for bargains in the oil patch. In addition to short-term problems including dropping demand thanks to coronavirus and surging supply thanks to OPEC’s reluctance to cut back production in March, there remains the long-term risks for fossil fuel stock amid global warming concerns.

But a historic 10-million-barrel-per-day cut a month later coupled with normalizing demand propped up oil prices, and oil is back in the high-$40 range — with analysts at Goldman Sachs predicting crude could hit $65 next year. I gave up on oil stocks, however, and among the picks I specifically warned against was Halliburton, which has surged 50% since I advised against the stock in June.

Not giving marijuana stocks room to run: It should not be news to anyone that American perceptions of marijuana have changed greatly in the last few years and that the trend of legalization is destined to continue nationwide. But by October, with all polls pointing to Biden winning and chances of Democratic gains in Congress, I was pretty convinced the market had priced in any 2021 actions to liberalize weed in the U.S. and that it was time to stop buying the rumor and start selling the news.

Since Oct. 1, however, top stocks like Canopy Growth
CGC,
-1.42%
and broad ETFs like the AdvisorShares Pure Cannabis ETF
YOLO,
+2.91%
have found another gear and powered significantly higher. The ETF is up 50% since then and Canopy Growth is up 80%.

Abandoning bonds: I am in my 40s, so particularly in my tax-deferred accounts I make it a point to avoid bonds and go all-in on stocks. With almost two decades until I can get my cash back from 401(k) and IRA investments, it’s a near certainty the stock market will be much higher by then.

But if like me you’ve written off bonds as an old-school asset that is only good for folks at or near retirement and looking for capital preservation, consider that the iShares 20+ Year Treasury Bond ETF
TLT,
-0.27%
has actually slightly outperformed the S&P 500 this year.

There is certainly room for bonds in any portfolio, presuming you pay attention to the market. I simply wasn’t in 2020, and missed out.

Jeff Reeves is a MarketWatch columnist. He doesn’t own any of the securities mentioned here.

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

7 days ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

4 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

1 month ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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