Markets
The Best and Worst Performing Sectors of 2020
The Best and Worst Performing Sectors of 2020
To say that 2020 was an unusual year in markets would be a vast understatement.
In 2020, we saw the quickest and deepest bear market decline in history, trillions of dollars of global stimulus, the highest volatility (VIX) on record, negative oil prices, and the fastest recovery from a bear market ever—just to name a few of the abnormalities.
And while the broader economy is still in a state of repair, investors finished the year in the black. The S&P 500, for example, ended with 16.3% gains, which was an above-average outing for the benchmark index.
Winners and Losing Sectors of 2020
Today’s visualization uses an augmented screenshot of the FinViz treemap, showing the final numbers posted for major U.S.-listed companies, sorted by sector and industry.
As you can see, the best and worst performing sectors generally fall into two categories: those that benefitted from COVID-19, and those that didn’t.
This massive divergence is evident in the numbers. Companies in winning sectors are often up double or triple digits—while their losing counterparts were often down double digits, sometimes even halving in value from how they started the year.
The Winners
1. Software Applications
It was another banner year for Big Tech, but some of the top performing companies were those that acted as enablers to remote working and ecommerce. Perhaps the most notable entry here is Shopify, which rose 178% on the year and is nearly a $150 billion company today.
2. Internet Retail
While Amazon is the undisputed 800-pound gorilla in ecommerce, companies like Etsy and Wayfair also had incredible years—as did many internet retail plays on the opposite side of the Pacific. Chinese company Pinduoduo, described as the fastest growing tech company in the world, gained 331% on the year as it capitalized on emerging trends such as social ecommerce, team purchasing, and consumer-to-manufacturing (C2M) sales.
3. Basic Materials
It’s been a long downtrend in the commodity super cycle, but materials have come back into vogue. Copper prices are at eight-year highs, and gold hit all-time highs in August 2020. Some companies, such as Albemarle—the largest supplier of lithium for electric vehicles—doubled their stock price over the course of the year.
4. Freight and Logistics
The shift to ecommerce has come faster than anticipated, and companies like FedEx and UPS couldn’t be happier. And with the transportation of ultra-refrigerated vaccines lining up to be a key need of 2021, it’s no surprise to see Cryoport up 165% on the year.
5. Semiconductors
For a second straight year, semiconductor companies finished as winners on our list. The world needs more hardware to house and process the ever-expanding datasphere, and companies like Nvidia showed triple-digit gains in 2020, up 117%.
Honorable mentions: Discount stores, retail home improvement, farm and heavy construction machinery, medical care facilities, and consumer electronics
The Losers
1. Oil and Gas
The oil sector was already struggling pre-COVID with price wars and a supply glut, but then lockdowns and the shutdown of non-essential travel provided another blow. BP finished the year at nearly half its market capitalization, falling 46% on the year.
2. Diversified Banks
With record-low interest rates, shuttered physical locations, and credit risks looming from unemployed borrowers, bank stocks struggled in 2020. Wells Fargo, for example, finished down the year 44%.
3. Real Estate – Retail
Many malls have not been collecting rent checks from their tenants, creating a challenging environment for many property owners and managers. Simon, the country’s largest shopping mall operator, felt the pain as its stock dropped 41% in 2020.
4. Airlines
It goes without saying that less flying means less revenue for airlines. But going forward, with web conferencing now the professional norm, it’s also expected that lucrative business passenger numbers will take a hit in the future. United Airlines finished the year at less than half their market capitalization (-54%).
5. Aerospace/Defense
Many aerospace and defense stocks were unable to rebound to pre-pandemic levels. Boeing, for example, finished the year down 36%.
Markets
3 Reasons Why AI Enthusiasm Differs from the Dot-Com Bubble
Valuations are much lower than they were during the dot-com bubble, but what else sets the current AI enthusiasm apart?

3 Reasons Why AI Enthusiasm Differs from the Dot-Com Bubble
Artificial intelligence, like the internet during the dot-com bubble, is getting a lot of attention these days. In the second quarter of 2023, 177 S&P 500 companies mentioned “AI” during their earnings call, nearly triple the five-year average.
Not only that, companies that mentioned “AI” saw their stock price rise 13.3% from December 2022 to September 2023, compared to 1.5% for those that didn’t.
In this graphic from New York Life Investments, we look at current market conditions to find out if AI could be the next dot-com bubble.
Comparing the Dot-Com Bubble to Today
In the late 1990s, frenzied optimism for internet-related stocks led to a rapid rise in valuations and an eventual market crash in the early 2000s. By the time the market hit rock bottom, the tech-heavy Nasdaq 100 Index had dropped 82% from its peak.
The growing enthusiasm for AI has some concerned that it could be the next dot-com bubble. But here are three reasons that the current environment is different.
1. Valuations Are Lower
Stock valuations are much lower than they were at the peak of the dot-com bubble. For example, the forward price-to-earnings ratio of the Nasdaq 100 is significantly lower than it was in 2000.
Date | Forward P/E Ratio |
---|---|
March 2000 | 60.1x |
November 2023 | 26.4x |
Lower valuations are an indication that investors are putting more emphasis on earnings and stocks are less at risk of being overvalued.
2. Investors Are More Hesitant
During the dot-com bubble, flows to equity funds increased by 76% from 1999 to 2000.
Year | Combined ETF and Mutual Fund Flows to Equity Funds |
---|---|
1997 | $231B |
1998 | $163B |
1999 | $200B |
2000 | $352B |
2001 | $63B |
2002 | $14B |
Source: Investment Company Institute
In contrast, equity fund flows have been negative in 2022 and 2023.
Year | Combined ETF and Mutual Fund Flows to Equity Funds |
---|---|
2021 | $295B |
2022 | -$54B |
2023* | -$137B |
Source: Investment Company Institute
*2023 data is from January to September.
Based on fund flows, investors appear hesitant of stocks, rather than overly exuberant.
3. Companies Are More Established
Leading up to the internet bubble, the number of technology IPOs increased substantially.
Year | Number of Technology IPOs | Median Age |
---|---|---|
1997 | 174 | 8 |
1998 | 113 | 7 |
1999 | 370 | 4 |
2000 | 261 | 5 |
2001 | 24 | 9 |
2002 | 20 | 9 |
Many of these companies were relatively new and, at the peak of the bubble in 2000, only 14% of them were profitable.
In recent years, there have been far fewer tech IPOs as companies wait for more positive market conditions. And those that have gone public, the median age is much higher.
Year | Number of Technology IPOs | Median Age |
---|---|---|
2020 | 48 | 12 |
2021 | 126 | 12 |
2022 | 6 | 15 |
Ultimately, many of the companies benefitting from AI are established companies that are already publicly traded. New, unproven companies are much less common in public markets.
Navigating Modern Tech Amid Dot-Com Bubble Worries
Valuations, equity flows, and the shortage of tech IPOs all suggest that AI isn’t shaping up to be the next dot-com bubble.
However, risk is still present in the market. For instance, only 33% of tech companies that went public in 2022 were profitable. Investors can help manage their risk by keeping a diversified portfolio rather than choosing individual stocks.

Explore more insights from New York Life Investments.

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