5 Best-Performing Stocks in 2023 - YoP BUZZ NEWS

5 Best-Performing Stocks in 2023

Despite the ups and downs of 2023, several assets maintained a good track and delivered exceptional growth.

In the global economy, the past year has been eventful. The Russia-Ukraine war in 2023 accelerated the global cost-of-living crisis that has afflicted several countries. It was also a year of bank failures, with otherwise strong banks in the United States and Switzerland failing.

With the closure of FTX, a leading crypto exchange; the trial of its creator, Sam Bankman-Fried; and the recent departure of Binance CEO Changpeng “CZ” Zhao following a federal probe, the cryptocurrency world has also experienced its own challenges.

In more recent weeks, artificial intelligencetook center stage when Sam Altman, CEO of OpenAI, the company behind the very popular ChatGPT, was ousted (and later reinstalled), an event that intensified conversations around the game-changing technology.

Within the ups and downs of the global and U.S. economy in 2023, some assets and asset classes have maintained a positive trajectory, produced remarkable growth and made money for their investors.

Here are five top-performing assets that have turned in a very impressive performance in 2023 as of the Dec. 19 market close, as well as the economic dynamics that have been responsible for their success:

1. Technology Stocks

As of December 19, the Nasdaq Composite Index had increased by 43.3% year to date. Exchange-traded funds, or ETFs, in the sector have performed admirably, with the iShares U.S. Technology ETF (ticker: IYW) returning 65.3% by market price year to date. Other technology stock funds from ETF providers such as Vanguard, State Street Global Advisors, and Invesco have also had outstanding results.

This should come as no surprise given that many of the best-performing stocks in 2023 are involved in either artificial intelligence or technological services.

AppLovin Corp. (APP) ranks eighth on the list, providing a platform for mobile developers to market their products. Nvidia Corp. (NVDA) is another tech behemoth that manufactures specialized chips for AI-powered software and gaming platforms.

Symbotic Inc. (SYM) is ranked third, specializing in supply chain automation and optimization through the use of AI technology. Vertiv Holdings Co. (VRT), a provider of hardware, software, and analytics for data centers and communication networks, is also a market leader. Palantir Technologies Inc. (PLTR), a commercial business and federal government big data analytics company, has likewise had a fantastic year.

Analysts credit this extraordinary surge to a variety of variables, including the Federal Reserve’s slowing rate hikes and growing interest in AI and its practical applications (due to the success of OpenAI).

Following their poor performance in 2022, technology stocks’ success in 2023 demonstrates that they should not be underestimated, especially considering the immense potential that technology offers for the future.

2. Consumer Discretionary Stocks

Consumer discretionary equities underperformed in 2022, finishing with negative growth. However, in 2023, the tide has turned, and consumer discretionary equities are among the best-performing assets of the year. As of December 19, XLY, a consumer discretionary ETF managed by State Street, had increased by 41.7% year to date.

PulteGroup Inc. (PHM), a homebuilder with a year-to-date return of 128.1%; Royal Caribbean Cruises Ltd. (RCL), a cruise business with a year-to-date return of 150.6%; and Carnival Corp. (CCL), a cruise company with a year-to-date return of 150.6%.a leisure travel services company with a year-to-date return of 132.1%; Booking Holdings Inc. (BKNG), a travel and restaurant online reservation company with a year-to-date return of 74.4%; and D.R. Horton Inc. (DHI), a homebuilder with a year-to-date return of 70.1%.

The performance of consumer discretionary stocks is determined by the economy’s expenditure on non-essentials. The favorable performance in 2023 can be due to a slowing in rate hikes, reduced inflation in the second half of the year, low unemployment, positive real wage growth, and other variables.

There’s an old adage that you should never gamble against the American consumer, and 2023 has certainly confirmed that belief. Investors who have kept a bullish outlook on US consumer spending have reason to rejoice as the year comes to a close.

3. Communications Stocks

In 2023, communications stocks have also proven to be durable. As of December 19, the Communication Services Select Sector SPDR Fund (XLC) had risen by 40.9% year to date.

Alphabet Inc. (GOOG, GOOGL), Meta Platforms Inc. (META), and Netflix Inc. (NFLX) are three significant companies in this area, with outstanding 2023 returns of 53.7%, 191.1%, and 67.9%, respectively.

Alphabet’s rise has been fueled in part by its investment in artificial intelligence. It has introduced its own ChatGPT version, Bard, as well as other generative AI technologies. And this is only a small portion of the company’s massive investment in AI and machine learning over the years.

Meta has also gone on a cost-cutting spree while continuing to invest in AI, augmented reality, and virtual reality. Users are increasing, ad income is rebounding, and Facebook Reels is performing well.

Netflix has seen an increase in paying customers as it pushes down on password sharing and introduces paid sharing as an option. The ad-based membership tier has also contributed to increased revenue.

The communications sector, like consumer discretionary, had a dismal 2022. However, stronger economic expectations, the influence of artificial intelligence, spending cuts, and a resurgence in advertising spend have elevated communications stocks to one of the best-performing asset classes in 2023.

4. S&P 500

Only individuals who invested only in technology, consumer discretionary, and communications stocks outperformed the S&P 500 Index in 2023.

We’re classifying the S&P 500 as an asset class because, with the rise of passive investing, some investors are putting all of their money in the S&P, frequently through ultra-low-cost funds that replicate the index. Given the impossibility of the average investor to outperform the index, elite investors such as Warren Buffett have recommended investing in the S&P 500.

As of December 19, the S&P 500 has returned 24.2% year to date, with the three asset groups mentioned above contributing the most. Energy, health care, consumer basics, and utilities, on the other hand, have had a bad year.

The index’s good performance has reaffirmed the benefits of low-cost passive investing for investors who have stuck with it.

5. International Stocks

International stocks performed well in 2023, but the S&P 500 and companies in top-performing U.S. sectors outperformed them. IShares MSCI ACWI ETF (ACWI), a BlackRock-managed international ETF that invests in companies in developed and emerging markets, has returned 21.6% so far in 2023.

When the US effect is removed, the returns are smaller but still positive. Vanguard Total International Stock Index Fund (VXUS) is an ETF that invests in emerging and developed markets other than the United States. By market pricing, the fund has returned 13.9% year to date. Vanguard Developed countries Index Fund (VEA), an international equity ETF that solely invests in developed countries (excluding the United States), had returned 16% as of December 19.

Emerging markets have performed poorly, with VWO, Vanguard’s emerging-market ETF, returning 7.6% year to date (while its iShares cousin, IEMG, returned 9.5%). Still, considering money market funds yielding around 5% are popular right now, but with far reduced risk, that’s not a bad return.

Regardless, this demonstrates that, while non-US markets may have provided some diversification benefits, the US market has proven to be the greatest bet for investors in 2023. In short, investing solely in the S&P 500 has outperformed even the best-performing developed markets ETF (which includes the US). When the United States is removed, the difference widens, and it is greatest for emerging-market stocks.

This reflects the reality that the United States is home to some of the most productive and inventive businesses in the world.

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