• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Bulls Run On, Energy and REITs Rule, Chips Go Wild, Options Trump Stocks

Plus, we bid a not-so-sad adieu to the mania in 2021 in meme stocks, SPACs and NFTs.
By STEPHEN GUILFOYLE
Dec 31, 2021 | 06:49 AM EST
Stocks quotes in this article: XLE, XLRE, XLK, NVDA, ON, MRVL, AMD, XLC, XLU, XLP, RBLX

Invictus (excerpt)

"Beyond this place of wrath and tears

Looms but the Horror of the shade,

And yet the menace of the years

Finds and shall find me unafraid.

It matters not how strait the gate

How charged with punishments the scroll,

I am the master of my fate,

I am the captain of my soul."

- William Ernest Henley, 1888

The Persistence of Memory

Rise and shine. It's the last trading session of the year. The last calendar day of 2021.

It was the year that the economy rebounded with some vigor from the depths of a still-ongoing global pandemic. It was the year that stocks, for the most part, continued what is now a fantastic three-year run. As long as one can stand a stray off-year here or there, this "run for the roses" goes back far more than three years. Starting with 2003, which was the year that large-cap equity markets put an end to a three-year losing streak, the S&P 500 has posted 12 -- yes, twelve -- years of double-digit (10%+) gains in percentage terms and just one lone year of a double-digit decline. That year was, however, a doozy. The S&P 500 surrendered 38% of its value in 2008.

Looking broadly at my page of numbers, I see that the Dow Transports will likely bring home the title of best-performing domestic equity index, up 31% year to date with just this one session to go. The Nasdaq 100, up 27%, will finish in second place, with the S&P 500 (+25%), S&P Midcap 400 (+23%) and Nasdaq Composite (+22%) all close behind.

How did the small-caps do this year? Well, you tell me. The S&P SmallCap 600 stands up 25% for 2021, while the Russell 2000 has increased "only" 13%. So, you can say "well" in the broad sense, but depending on how you follow smaller-cap-size public companies, they either performed with the market or under-performed significantly.

As for sector performance, there were no real laggards. Using S&P sector-select SPDR ETFs as proxies, Energy (XLE) easily led the way, up 53% this year. (Don't tell the folks in DC, but within the sector, the Dow Jones US Coal Total Stock Market Index stands up 138% this year.) The REITs (XLRE) are up 45% this year. They might be boring, they might not be so much fun to write or read about, but they did pay the bills in 2021. The Technology sector (XLK) finished in third, which is two places below that sector's usual perch. Still, the ETF ran 35% this year. Not exactly awful. Semiconductors, though mired in a global shortage, have all the pricing power in the world and significantly outperformed Software for the year, led by Nvidia (NVDA) , up 127%, ON Semiconductor (ON) , up 106%, and Marvell Technology (MRVL) , up 84%. Thought you would see Advanced Micro Devices (AMD) up here with the big kids? Not with a paltry year-to-date performance of up just 58%, you don't.

Who's in the cellar this year? Communication Services (XLC) and Utilities (XLU) both gained just 17% this year, finishing in ninth and 10th place of our 11 sectors. It was Consumer Staples (XLP) that could "only" put together a gain of 16% this year. Just 16%?

Three cheers for the policy makers who so obscured free market price discovery as to allow us to recover much more easily than we ever would have thought in our youth when we make mistakes. Three cheers for easy money and a highly liquid environment. How long can that go on? The very thought places in my mind a piece of art -- a painting by Salvador Dali, "The Persistence of Memory." I'll leave that thought right there, as policy once again will try to go where it should in 2022, but will it? Can it? Or will time melt just a little more as traders forget in order to adapt.

A Toast

So, it is now that I raise my glass of oat milk (It is 04:00 Friday) and bid the year 2021 adieu. We'll miss you as we miss all past years that we have successfully survived. We may not miss everything about you, though.

We will not miss the absurdity of the "meme" stocks, driven one way by short sellers and another by the masses, with no regard for corporate performance. One benefit worth keeping, though, was the retail participation and the change that this mania wrought. It is a new kind of respect that the arrogant must now pay the unwashed, even tracking their online commentary.

We may or may not miss the mainstream interest in cryptocurrencies, depending on how we are positioned.... or should I say we won't miss the speculative interest in cryptocurrencies that goes well beyond the perceived quality of the top few tokens in terms of market cap. Do I dare even mention NFTs, aka non-fungible tokens? Artwork has always been around, so yes, this is a valid asset class. How to value it, I think, would be in the eye of the beholder more than anything else. What is a Brian Leetch rookie card worth. I have eight of them. Good thing I have always liked Brian Leetch.

We welcome the increased interest in private companies "going public." There were more than 400 traditional initial public offerings (IPOs) and more than 600 special purpose acquisition company (SPAC) deals in 2021. Many of these names have peaked and are trading well off of their highs, or even below their IPO prices. We will not miss watching them eat each other. Cannibalization? In a way, yes. Many of these money-losing companies, dependent upon an idea and some growth, have robbed each other of what might have been share price appreciation as there have been so many holes available in which to bury investment dollars.

Don't worry. According to The Wall Street Journal there are still more than 900 private companies valued at more than $1 billion currently being looked at by gravy-hungry investment bankers and hundreds of blank-check companies seeking targets. Maybe, if those valuations can stand up, some of the higher-quality names can follow the example of Roblox Corp. (RBLX) and go public through a Direct Public Offering, bypassing everyone.

We may not miss the increased volume across options markets. According to the CBOE, the daily average notional value of traded single-stock options has exceeded $467 billion, which compares to $410 billion for equities. This will be the first time ever that options-related market activity exceeds that of their underlying stocks. We love the flexibility that liquid options markets provide. We definitely will not miss the ability of options market price discovery to force an excess in equity market price discovery that has nothing to do with anything beyond market makers being forced to protect themselves.

We won't miss the ongoing battle between consumer-level inflation, economic growth, the velocity of money and the slope of the US Treasury yield curve, primarily because "they" are still writing that story.

So, yes, goodbye to you, 2021. Another year that the Mets and Jets were losers. Another year that I fell further behind my personal bests for the mile, and on the bench. Another year that somehow, by the grace of a merciful God, I finished healthy and successfully supported my family, which is the only thing that really counts.

Maybe, despite all that I or we think we have to complain about, we have a lot more to celebrate. To be grateful for. Maybe 2022 will turn out much better or much worse. Some may not complete another lap around the sun. No guarantees. Maybe, though, we can learn how to love. Maybe we can forget how to hate. "Maybe" is really up to us. Everyone of us.

Happy New Year, Gang.

Economics (All Times Eastern)

No significant domestic macroeconomic data-points scheduled for release.

The Fed (All Times Eastern)

No public appearances scheduled.

Today's Earnings Highlights (Consensus EPS Expectations)

No significant quarterly financial scheduled for release.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Guilfoyle was long NVDA, MRVL, AMD and RBLX equity.

TAGS: IPOs | ETFs | Indexes | Investing | Options | REITs | Small Cap | Stocks | Consumer | Energy | Semiconductors & Semiconductor Equipment | Transportation | Consumer Staples | Real Money

More from Stocks

Market Looks Good from Above, Poor From Below

James "Rev Shark" DePorre
Jun 29, 2022 4:21 PM EDT

The major indexes held up well, but underneath, it wasn't pretty.

This FAANG Stock's Technicals Are at a Summer Crossroads

Bob Lang
Jun 29, 2022 3:30 PM EDT

Summer is a time when this name usually gains momentum. Will it this time?

Kass: Untapped Homeowners Equity and Imbedded Gains Will Be a Ballast to Growth

Doug Kass
Jun 29, 2022 3:00 PM EDT

Homeowners equity has more than tripled in the last decade.

Good High Yield Stocks Don't Have to Be Pricey. We've Got 3 to Prove It

Bob Ciura
Jun 29, 2022 1:32 PM EDT

Here are three cheap dividend stocks that should pay off big.

Don't Expect Fed Relief Anytime Soon

Maleeha Bengali
Jun 29, 2022 12:38 PM EDT

Major selloffs in recent years were accompanied by Fed cuts and market bottoms, but this time is different.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 04:51 PM EDT PAUL PRICE

    We should be in for better starting soon.

    Window dressing tomorrow, the last day of ...
  • 11:56 AM EDT STEPHEN GUILFOYLE

    Stocks Under $10

    Check out what's going on in the Stocks Under $10 ...
  • 12:04 AM EDT PAUL PRICE

    Two Good Signs -- Especially for Small-Cap Investors

  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2022 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login