The Most Interesting Charts of 2020

"Success is a lousy teacher. It seduces smart people into thinking they can't lose." - Bill Gates.


If success is a lousy teacher, 2020 could be classified as the year of learning opportunities. We outline the most interesting (some might say ridiculous) charts of the year.



Source: Unknown Twitter Account


The above graph shows the ebb and flow of investor emotions during volatile markets. Upward markets solicit emotions of missing out on gains. Downward markets make people feel like they should have seen the crash coming. Both behaviors are destructive.



Source: Ycharts


Piggybacking off the first graph of investor psychology, the above shows the S&P 500 (blue) compared to retail and institutional money market balances. Notice how cash balances swell shortly after the sell-off, only to miss out on equity gains. More recently, investors have plowed money back into stocks at much higher index levels. Selling near the market lows and buying at much higher levels is common investor behavior.


Source: Ycharts


The above chart shows daily swings for various U.S. equity indices (from top to bottom; Nasdaq, S&P, and Dow) during 2020. Only in hindsight can we fully appreciate the massive daily swings, from a 12.76% loss to a 11% gain! We can educate ourselves on what we should do during volatile markets, but it's impossible to replicate human fear during the eye of the storm.



Source: Ycharts


The above chart shows crude oil futures prices for the year. The collapse in oil would have been a crisis in its own right, but was overshadowed by COVID, Presidential election, and stock market volatility. Oil demand fell off a cliff and supply flooded the market. In the spring, you had to pay someone to take delivery of a barrel of crude oil.



Source: Ycharts


The above chart shows the ascension of Bitcoin. The "blue chip" of cryptocurrency's rise was driven by institutional investors giving Bitcoin enthusiasts hope for mainstream adoption.



Source: Ycharts


The above charts compare Tesla's and Berkshire Hathaway's market cap (top graph) and free cash flow (through Q3 2020). Market pessimists will point to such confounding dislocations as proof investors are off their rocker. Tesla is worth more than Berkshire measured by market cap, but has a fraction of the free cash flow. That's enough to make a value investor's head explode.


Source: Ycharts


The above chart shows the divergence between Tesla and the other "big four" auto manufacturers. Perhaps no company captures the polarization of the stock market better than Tesla. I know super-smart people that think Tesla is undervalued at these levels. I know super-smart people that think Tesla is a zero.



Source: Ycharts


Nothing to see here. Another juggernaut return year for big tech stocks. When someone asks what the market did today, look no further than the above names which make up ~30% of the S&P 500.


Source: Ycharts


The above graph is another dramatic example of the valuation gap between tech and value stocks. The top graph shows Zoom's performance and price to sales ratio (the higher the number, the greater multiple of sales the stock trades). The lower graph shows the same metrics for Wells Fargo. Zoom's shares are 33x more expensive than Wells Fargo measured by price to sales!


Source: Ycharts


The above graph shows the wide dispersion of returns between the best performing sector (technology) and the worst (energy). Usually a rising market tide lifts all boats, but that hasn't been the case in 2020.



Source: Ycharts


The above graph shows the companies that were immersed in the race for a COVID vaccine. We fielded many questions about investing in the vaccine pioneers, and as you can see, it's virtually impossible to pick winners and losers. In fact, Pfizer was first to the finish line and the stock is flat for the year. Go figure.



Source: Ycharts


The above graph shows long term interest rates for various countries. Perhaps the best case against rising interest rates in the US is the plethora of negative yielding debt around the globe. To a German investor, the 0.92% yield on the 10-year U.S. Treasury might look very attractive.



Source: Ycharts


The above shows performance for long-term Treasuries (purple), U.S. aggregate bond index (orange), and short-term Treasures (blue). Despite low starting yields, high-quality fixed income provided a safe haven during the apex of the COVID sell-off.


Source: Ycharts


The above graph shows the surge in refinancing activity (orange) due to record low mortgage rates (purple). Lower mortgage rates have pushed home prices higher in many U.S. markets.


Wishing everyone a safe and Happy New Year!

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