foxex: Beloved Stocks

The Market Sum | Insight after the bell

By Caleb Silver, Editor in Chief

Tuesday's Headlines

1. U.S. markets slip as trade uncertainty continues

2. Congress moves forward on USMCA deal

3. ExxonMobil skirts a $1.6 billion climate change lawsuit

4. What are the most beloved stocks?

Markets Closed

Dow
27,881.72 -0.10%

S&P
3,132.52 -0.11%

Nasdaq
8,616.18 -0.07%

VIX
15.68 -1.13%

Bitcoin
$7,266.73 -1.70%

US 10-Yr Yield
1.833 +0.22%

Markets Today

U.S. markets could not hold onto early gains as trade rumors about a possible delay in the December 15 implementation of new tariffs on $156 billion in Chinese goods did not manifest. The WSJ reported it might happen, but Larry Kudlow, an economic adviser to Trump, quelled those rumors. With 5 days to go before those new tariffs go into place, the next few days will be volatile. The Federal Reserve began its two day meeting today on interest rates, but almost no one is expecting another rate cut, or hints of one in the future.

Headlines

House speaker Nancy Pelosi announced a deal on the U.S. Mexico Canada Agreement (USMCA) that is expected to lead to a House vote on the treaty next week.
ExxonMobil (XOM) won a $1.6 billion suit brought by the New York Attorney General alleging that it deceived investors about the costs of climate change. The trial, which began in October, was the result of an investigation begun in 2015.
Boeing (BA) reported 30 new orders for its 737 Max jet in November. The jet was implicated in crashes which killed nearly 350 people. Boeing has lost a total of 84 orders for commercial aircraft this year. All 737 Max jets were grounded in March, and will stay grounded until regulators approve changes to flight-control software.
Facebook (FB) said today that it would move ahead with plans to add encryption to its messaging platforms. U.S. Attorney General William Barr had asked for government access to the messaging service. He was rebuffed by Facebook executives, who claimed that access would compromise the security of the messaging services.
Biotech and pharmaceutical companies have spent a record $342 billion on M&A this year, surpassing the previous record of $215 billion in 2016.
The Department of Justice is reviewing Alphabet's (GOOGL) acquisition of Fitbit (FIT) over concerns that it would give Google access to sensitive health information.

What are the Most Beloved Stocks?

There is a reason that Apple (AAPL) and Amazon (AMZN) get a lot of our attention. They have become ubiquitous in our lives, and they are the most widely held stocks in index funds, ETFs, and mutual funds. It turns out that they are also the most widely held stocks across generations.

In a Schwab survey of its self-directed brokerage accounts (SDBAs), Apple and Amazon are the most widely held stocks among millennials, Generation X, and Baby Boomers, by a wide margin. The crossover between Gen X and Baby Boomers is pretty high. Millennials own many of the same stocks, but the big outlier was the Bitcoin Investment Trust, which is kind of a mutual fund for crypto investors.

Here is the breakdown via Schwab:

In terms of how these generations invest, the portfolio mix is pretty interesting.

According to the Schwab data, mutual funds continued to hold the highest percentage of participant assets, with Baby Boomers allocating approximately 39% of their portfolios to them, followed by Gen X at 36% and Millennials at 34%. Equities were the second-largest allocation for all portfolios, with Baby Boomers and Gen X allocating approximately 28% of their portfolios to them, followed by Millennials at 25%.

Millennials continued to allocate more to ETFs (24%) than did Gen X (20%) and Baby Boomers (17%). They also held more cash (16%) than other generations (Gen X had 14%, followed by Boomers at 12%). Baby Boomers held approximately 4% of their portfolios in fixed income, followed by Gen X (1%) and Millennials (0.8%).

Top Ten Stocks of the Past 10 Years

We are nearing the end of the year and the end of the decade, so you will start to see more stories and statistics about best and worst performers across asset classes. Scorekeeping is part of the financial media trade, and while you don't need to do anything with this information except process it like you normally would as it relates to your investment strategy, the results can be pretty interesting.

We pulled the top ten stocks in the S&P 500 by their 10-year returns to see who came out on top. Netflix, the top performing stock in the "10s," should not come as too much of a surprise. But Market Axxess Holdings, which offers a global bond trading platform, did surprise us as the second best performer, with a 10 year return of over 3000%. So did the Transdigm Group, which makes aerospace products. If you told me 10 years ago that either one of these companies would outperform Apple, Amazon or Microsoft over the next decade, I would've told you that you were in outer space.

Investing is fascinating sometimes.

More News:

Why Bulls Betting on Perfect Market May Get Burned by Q1 Sell-Off

Skyworks Stock Breaks Out After Two-Notch Upgrade

Salesforce Stock Began 2019 With Pop, Then Traded Sideways

chart courtesy YCHARTS

Automotive retailer AutoZone rose 6.9% after it announced strong sales growth. Identity theft protection company NortonLifeLock rose 3.5% due to takeover interest from McAfee. Travel site Expedia Group rose 2.9% after receiving a "buy" rating from SunTrust Banks.

Investment firm Franklin Resources fell 4.4% today after it reported a drop in assets under management. Exchange holding company Cboe Global Markets fell 3.3% after it announced it was purchasing European market-maker EuroCCP. Netflix fell 3.1% after Needham analyst Laura Martin said that its business model was unsustainable, and downgraded it to "underperform."

Word of the Day
Asset Allocation
Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance, and investment horizon. The three main asset classes - equities, fixed-income, and cash and equivalents - have different levels of risk and return, so each will behave differently over time.

Image Source: AFP / Stringer

Today in History

December 10, 1901

Today in 1901, the first Nobel Prizes were awarded. The prize in physics was given to Wilhelm Röntgen who discovered x-rays. Jacobus H. van 't Hoff won the chemistry prize for his work explaining how osmotic pressure allows water and other chemicals to pass through cell walls. The prize for medicine was awarded to Emil von Behring for his treatment for diphtheria. The prize in literature was given to Sully Prudhomme for his poetry. The peace prize was shared between Henry Dunant, the founder of the International Committee of the Red Cross and prominent pacifist Frédéric Passy.

Source: https://www.nobelprize.org/prizes/themes/the-very-first-nobel-prizes/