soared in 2009 as the Federal Reserve slashed interest rates to almost zero, the Treasury recapitalized U.S.
and legislators approved unprecedented stimuli.
, small-caps and distressed companies were among the year's top performers. The
, a small-company barometer, has surged 80% from its March 9 bottom. The mega-cap
Dow Jones Industrial Average
has climbed 59%.
During the spring and summer, easy money was made in financial stocks. After the collapse of
and the sales of
, the so-called bulge bracket was decimated. The remaining players benefited not only from reduced competition in the advisory and trading businesses, but nearly free money from the Fed. Investors with even marginal insight into the shaken-up industry reaped returns.
Here's a look at some of this year's big trends in stock investing, and what investors should expect in 2010:
Goldman leads banks
: During the first three quarters,
racked up $13.57 of per-share profit and boosted its net margin from 6% to 23%. Despite accusations from Main Street and Washington, Goldman fulfilled its primary obligation: to reward shareholders. Its stock has returned 94% in 2009.
rallied 32% and 83%, respectively. Shares of
Bank of America
rose 9%, while those of
fell 9%. Industry laggard
endured a 49% drop in its stock price.
Tech stocks rebound
surged 77% from the market bottom as shares of
doubled. Chipmaker stocks recently ran as investors sought riskier growth opportunities, propelling the
iShares S&P North America Semiconductor Index
up 20% since November.
A flight to quality
: The blue-chip Dow, which had previously lagged the other two major indices, outperformed over the past three months.
led the average, gaining at least 19% each and outpacing the index's 8% advance.
Investors have been loading up on dividend-paying stocks, such as utilities. The
Dow Jones Utility Average
has climbed 11% since November.
A mixed outlook for 2010
: In 2009, investors struggled to make sense of a bull market that persisted despite spotty earnings and falling revenue at many companies. Investment research firm
estimates that U.S. investors pulled $32 billion out of equity mutual funds and poured $370 billion into bond funds this year. Fear caused these investors to miss the 26% jump in the
S&P 500 Index
Opinion remains varied, but many analysts and economists expect 2010 to be a tough year.
Big gains from big names
: Large companies that cut costs and expanded in emerging market will use operating leverage to magnify their bottom lines next year. Companies in slow-growth industries will be rebranded as momentum names.
is among companies to watch next year. The household products maker has trimmed its expenses, and its stock remains undervalued despite its 22% gain this year.
Bargains in small- and mid-caps
: There are still deals to be had among well-managed small companies in growth industries. Our quantitative model has found some strong micro-caps in health care, including
. We also expect outsourcing firms, such as
, to outperform.
-- Reported by Jake Lynch in Boston.