Now we start the long march that will be the 2020 trading year -- and when we enter a new year, return-measurement tools get reset and we begin anew. Even though past performance is no guarantee of future performance, understanding the drives of the last year's performance can be illuminating for investors.
So, let's have a cursory look as to how the stock market fared in 2019: Among the major U.S. equity indexes, the Nasdaq composite led the pack, finishing the year up just over 35%, followed by the S&P 500's 28.9% return. A somewhat distant third was the Russell 2000 and its 23.7% gain, followed by the Dow Jones Industrial Average, which gained 22.3%. Impressive results, but so too was the 32.4% return delivered by the Real Money Post Industrial Average (RMPIA).
Despite lagging the major market indexes during the September 2019 quarter, RMPIA's S&P 500-beating performance of a 9.5% rise in the December quarter built on its almost 20% gain recorded during the first half of the year, as investor concerns faded over the US-China trade deal, UK elections and growth speed of the U.S. economy.
In examining the major market indexes performance over last year, we find it was primarily powered by just a handful of stocks: Apple (AAPL) , Microsoft (MSFT) and Visa (V) for the Dow, and Advanced Micro Devices (AMD) , Lam Research (LRCX) and KLA Corp. (KLAC) for the S&P 500. By comparison, 12 of RMPIA's 30 constituents outperformed the index's overall 2019 return of 32.4% led by Apple; Celgene Corp. (CELG) , which was acquired by Bristol-Myers Squibb Company (BMY) ; Mastercard (MA) ; Facebook (FB) ; and Qualcomm (QCOM) . Offsetting the positive moves made by nearly all of RMPIA's holdings were the 2019 declines in Kraft Heinz (KHC) , Walgreen Boots Alliance (WBA) and Biogen (BIIB) shares.
Shifting gears from 2019 to 2020, there are a number of favorable drivers to be had for RMPIA constituents. A number of those will likely to discussed next week during 2020 International CES that is being held Tuesday through Friday. Historically, the trade show's keynote speakers have showcased what's next in tech -- and product announcements made during CES tend to hit shelves later in the year.
With keynotes including Samsung, Daimler AG (DDAIF) , Delta Air Lines (DAL) , streaming service Quibi, and Comcast's (CMCSA) NBC Universal, there will likely be ample news to be had surrounding 5G, gigabit fiber, mobile payments, privacy, social media, streaming video and content. In short, it has the potential to generate meaningful developments for a number of RMPIA constituents including Qualcomm, PayPal (PYPL) , Netflix (NFLX) , Mastercard, Facebook, and Alphabet (GOOGL) . Even though Apple will once again not formally attend CES, we can once again assume there will be ample chatter about the company's forthcoming 2020 products during CES.
As the CES euphoria fades we will soon be in the thick of the December quarter earnings season that begins in force on Jan. 14, one day before President Donald Trump is expected to sign the "phase one" trade agreement with China.
The good, the bad and the potentially ugly clues obtained in corporate reports between now and the earnings deluge will inform investors as to how realistic the consensus earnings per share view of 9.6% year-over-year growth for the S&P 500 is. That determination over the coming weeks will likely be one of the major catalysts for the market's March quarter move. As we look at RMPIA, whether it's the 5G smartphone upgrade cycle that will power Apple and Qualcomm or the aging of the population tailwind for Allergan (AGN) and CVS Health (CVS) or the continued adoption of digital commerce and mobile payments that bodes well for Amazon (AMZN) , MasterCard and PayPal, there are ample reasons to remain bullish with RMPIA in 2020.
(AAPL, AMZN, BMY, CVS, CMCSA, FB, GOOGL, LRCX, and MSFT are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells them? Learn more now.)
