January 14, 2020
Market Highlights 4Q 2019
All major indices and asset classes had a strong 2019. The Nasdaq Composite finished the year up 36.7% followed by the S&P500 gaining 31.5% and the Dow Jones Industrial Average closing out the year with 25.3% return. All eleven sectors in the S&P 500 posted positive returns for the year, with Information Technology and Communication Services gaining the most with returns of 50.3% and 32.7%, respectively. Size and returns exhibited a positive correlation as large-caps continued to outperform mid-caps which beat small-cap names. Specifically, the large-cap Russell 1000 Index gained 31.4%, ahead of the Russell MidCap Index’s 30.5% rise for the year followed by the small-cap Russell 2000 Index’s 25.5% return. Growth stocks outperformed value stocks with the Russell 1000 Growth returning 36.4% compared with the Russell 1000 Value Index’s gain of 26.5% over the year. Bonds lagged stocks, with the Barclays U.S. Aggregate underperforming all equity benchmarks with an 8.7% return. Long-dated US Treasuries performed better with the Barclays Long-Term Treasury Index gaining 15.1%. Commodities gained, with the Bloomberg Commodity Index rising 5.4% while the dollar gained 0.22% lagging gold’s rise of 15.5%. Oil prices rose 34.5%. All major developed countries ended the year up in local currency terms, with the US being the best market with a total return of 31.5%. Emerging market countries had a strong year with Russia and Brazil posting the largest gains in local currency terms, 38.5% and 31.6%, respectively.
The stock market continued its climb in the fourth quarter with the Nasdaq Composite rising 12.5% followed by the S&P500 gaining 9.1% and Dow Jones Industrial Average returning 6.7%. Technology continued to lead in the fourth quarter despite the rotation into value that began in September returning 14.4% but was closely followed by Health Care returning 14.37%. Ten out of the eleven sectors in the S&P 500 posted positive returns for the quarter with Real Estate the sole decliner losing -0.5%. Small-cap stocks outperformed Large-cap stocks, which beat mid-cap names. Specifically, the Russell 2000 Index’s 9.9% return did better than the Russell 1000 Index and the Russell Mid-cap Index which posted gains of 9.0% and 7.1%, respectively, for the quarter. Growth stocks beat out value names, as the Russell 1000 Growth Index rose 10.6% compared to the 7.4% gain of the Russell 1000 Value Index over the same period. Bonds underperformed with the Barclays Aggregate Total Return underperforming all equity benchmarks with a 0.18% gain, while long-dated US Treasuries drastically underperformed, with the Barclays Long-Term Treasury Index losing -4.2%. The US Dollar Index lost -3.0% for the quarter, while oil gained 12.9%. Gold rose 2.9%.
Bill Miller’s 4Q 2019 Market Letter
The views expressed in this commentary reflect those of Miller Value Partners analyst(s) as of the date of the commentary. Any views are subject to change at any time based on market or other conditions, and Miller Value Partners disclaims any responsibility to update such views. The information presented should not be considered a recommendation to purchase or sell any security and should not be relied upon as investment advice. It should not be assumed that any purchase or sale decisions will be profitable or will equal the performance of any security mentioned. Past performance is no guarantee of future results.
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