If you're not feeling great about your S&P 500 portfolio over the past six months, join the club. But some lucky investors still found ways to make money.
All told, had you invested $10,000 in January and reinvested your money into the top stock currently in the S&P 500 each month this year, including Dollar General in June, you'd have $53,492 now, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith. That's an impressive six-month gain of 435%. That's quite a feat in a year the S&P 500 is down 19.9%. The same $10,000 invested in the S&P 500 would be worth just $8,000 now. That's a loss of $2,000.
While these six stocks jumped, the S&P 500 is squarely in a bear market. And a big chunk of that 20% year-to-date loss, 7.6%, happened just in June. If it feels painful, that's because it is. The S&P 500 is now on pace for its worst return for the first half of a year since 1970, says S&P Global Market Intelligence.
But if this cheers you up any, just know there are still ways to make money. It's also a reminder that the S&P 500's run so far isn't as devastating as it might sound.
"The implication is that if you aren't a wizened old investor you've just had the worst time of your investing life," said Daniel Wiener, chairman of Adviser Investments. "The trouble is, it's bunk."
S&P 500's Huge Returns
Hindsight is 20/20. And clearly, few if any investors could have picked out the top stock each of the past six months, as it's not a repeatable strategy. But the staggering numbers are a reminder to investors that gains can be found in a bear market.
Seven stocks in the world's most popular index, including discount retailer Dollar General, consumer staples company Brown-Forman and consumer discretionary Domino's Pizza, jumped more than 5% in June alone, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence and MarketSmith.
And that's partial evidence that while the first six months of the S&P 500 this year aren't great, they're far from the worst six months in history, Wiener said. He points out while stocks only fell 12.8% in the first six months of 2008, they plunged nearly 30% in the second half. Additionally, in the six months from September 2008 through February 2009, the S&P 500 dropped 42.7%.
In fact, the S&P 500 dropped more than 20% no less than 13 times since 1970, Wiener said.
Biggest S&P 500 Winners Of The Year Tell The Story
Looking at the top stocks of June tells you exactly what S&P 500 investors are bracing for: recession.
The top stock in the month, Dollar General, is a winner in times of economic slowdowns. Many consumers "trade down" to lower priced items when money gets tight. So it's little surprise to see the stock jump more than 12% in a month the S&P 500 sags. Similarly, Brown-Forman, a seller of alcoholic drinks, gained 7% on the month. Other makes of low priced essentials, like Domino's Pizza and General Mills, also fared well in the month.
In fact, just looking at the S&P 500's top stock during each month shows you how investors' attention has shifted. January was all about energy, with Halliburton jumping 34.4%. Investors loved energy for their inflation protection, low valuations and dividends. But energy excitement has eased. And that enthusiasm shifted to a hopeful rally in March, with a 3.6% rise in the S&P 500 and 56.4% jump in Nielsen Holdings. That's the largest monthly jump of any stock all year.
But now, it's back to despair. Recession stocks are the rage for now. We'll have to keep watching general market indicators to see what the second half might bring.
How To Turn $10,000 Into $53,492 In Three Months
Top S&P 500 stock in each month of the year so far
| Month | Top S&P 500 stock | Symbol | Stock monthly % gain | Sector | S&P 500 % monthly ch. | Beg. bal. | Cumulative value of $10,000 investment in January reinvested in best stock each month |
|---|---|---|---|---|---|---|---|
| January | Halliburton | 34.4% | Energy | -5.3% | $10,000 | $13,440 | |
| February | SolarEdge | 34.1 | Information Technology | -3.1 | $13,440 | $18,023 | |
| March | Nielsen Holdings | 56.4 | Industrials | 3.6 | $18,023 | $28,188 | |
| April | 26.9 | Communication Services | -5.4 | $28,188 | $35,771 | ||
| May | Albemarle | 33.40 | Materials | -5.3 | $35,771 | $47,718 | |
| June | Dollar General | 12.1 | Consumer Discretionary | -7.7 | $47,718 | $53,492 |
