Top 5 Investing Themes That Returned 50%+ In 2019

The S&P 500 is up more than 27% year-to-date making it the index's best annual performance since its 32% return back in 2013. While many market watchers expected gains in 2019, few expected to see this type of rally at the beginning of the year given that the U.S. economy appeared to be slowing and trade tensions with China figured to stifle global growth.

Despite virtually flat earnings year-over-year for large-caps (remember that last year's numbers were inflated by the corporate tax cuts), traders remained in a buying mood as recessionary fears essentially disappeared by the time Q4 rolled around. Small-caps lagged again but 20% return are still nothing to complain about.

As always, the market's top performing sectors blew those return figures out of the water. In fact, there are a dozen non-leveraged ETFs that are up at least 50% on the year.

Palladium

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Palladium is a metal that's used in catalytic converters and fuel, but also shows up in things, such as jewelry and electronics. The rally early in the year started as a value play in the precious metals space but has since exploded as a result of a supply/demand imbalance.

Home Construction

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Homebuilder confidence, which recently hit a 20-year high, has been a reflection of an economy that has benefited from strong consumer spending, ultra-low interest rates and lots of cheap money. This group has probably gotten a little overextended, but a corresponding rise in lumber prices confirms that the rally is backed by healthy fundamentals and a low housing supply.

Early Stage Biotech

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It's hard to believe that this group was virtually unchanged on the year as recently as October. But once the healthcare rally kicked in, the Fed confirmed its dovish tone and we got strong jobs and GDP data, it was off to the races. This group remains highly volatile but should be supported as long as debt is cheap and investors are willing to add risk.

Semiconductors

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This is one of the more heavily trade-dependent sectors. While there's been a great deal of back and forth with regard to trade rhetoric, the underlying fundamental backdrop for chip stocks has been favorable and backed by solid demand. The phase one trade deal didn't really include any tech-related concessions so watch to see how phase two begins to play out.

Solar Energy

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The overall energy sector continues to struggle, but consumers and investors are starting to warm up to the idea of a clean energy alternative. The costs of installing solar panels has been prohibitive in the past despite tax credits, but that's starting to change. Oil prices are unlikely to spike anytime soon but solar is quickly become a more viable alternative.

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