The Top S&P 500 Stocks by Annual Returns

The average annual return of the S&P 500 was 10% from 1980-2022, excluding dividends. Of course, there are some companies that deliver much higher returns in any given year.

In this graphic using data from S&P Dow Jones Indices, we explore the top S&P 500 stocks with the best single year returns over the last four decades.

Ranking the Top S&P 500 Stocks

In order to find the top gainers, S&P took the top 10 best-performing stocks each year and then narrowed that list down to the top 50 overall. They ranked the top S&P 500 stocks by price returns, meaning that no dividends or stock distributions were included.

The best gains were clustered in a few select years, including the 1999 dot-com boom, the 2003 stock market rally, and the 2009 recovery from the Global Financial Crisis. None of the biggest gains happened in 2021 or 2022.

Qualcomm was by far the top-performer in any one calendar year window. The company had key patents for Code Division Multiple Access (CDMA) technology, which enabled fast wireless internet access and became the basis for 3G networks.

Its stock took off in 1999 as it shed less profitable business lines, resolved a patent dispute with competitor Ericsson, and joined the S&P 500 Index. At the time, CNN reported that one lucky investor who heard about Qualcomm from an investment-banker-turned-rabbi earned $17 million—roughly $30 million in today’s dollars.

The most recent stocks to make the rankings were both from 2020: well-known Tesla (#2) and lesser-known online marketplace Etsy (#17), which saw sales from independent creators surge during the early COVID-19 pandemic. The dollar value of items sold on Etsy more than doubled from $5.3 billion in 2019 to $10.3 billion in 2020, with mask sales accounting for 7% of the total.

Biggest Gainers in Each Sector

While information technology stocks made up nearly half of the list, there is representation from nine of the 11 S&P 500 sectors. No companies from the Industrials or Consumer Staples sectors made it into the ranks of the top S&P 500 stocks by annual returns.

Below, we show the stock with the best annual return for each sector.

Tesla was the top-performing Consumer Discretionary stock on the list. After meeting the requirement of four consecutive quarters of positive earnings, it joined the S&P 500 Index on December 21, 2020. The company’s performance was boosted by the announcement that it would be included in the S&P 500, along with strong performance in China, and general EV buzz as environmental regulations tightened worldwide.

In the realm of Communication Services, DSC Communications saw a sizable return in 1992. The telecommunications equipment company had contracts with major companies such as Bell and Motorola. Alcatel-Lucent (then Alcatel), a French producer of mobile phones, purchased DSC Communications in 1998.

Serial Success Stories

It’s impressive to make the list of the top S&P 500 stocks by calendar returns once, but there are seven companies that have done it twice.

Some stocks saw their repeated outperformance close together, with Dell making the ranks back-to-back in 1997 and 1998.

On the other hand, a select few have more staying power. Computing giant NVIDIA topped the charts in 2001 and triumphed again 15 years later in 2016. And this year might be another win, as the company has recently reached a $1 trillion market capitalization and has the highest year-to-date return in the S&P 500 as of July 6, 2023.

The post The 50 Best One-Year Returns on the S&P 500 (1980-2022) appeared first on Visual Capitalist.

1 Billion Square Feet of Empty Office Space

In April, one of America’s largest office owners, Brookfield, defaulted on a $161 million loan.

The loan, covering 12 office buildings, was mainly concentrated in the Washington, D.C. market. Faced with low occupancy rates, it joined other office giants Blackstone and WeWork defaulting on office debt this year.

The above graphic shows nearly 1 billion square feet of empty office space in the U.S. based on data from JLL—and the wider implications of office towers standing empty.

Ranking U.S. Cities by Empty Office Space

At the end of the first quarter of 2023, a record 963 million square feet of office space was unoccupied in America. An estimated five to 10 office towers are at risk of defaulting each month according to Manus Clancy, senior managing director at Trepp.

Here are cities ranked by their total square feet of office vacancy as of Q1 2023. Figures include central business districts and suburban areas.

Ranking	Market	Total Vacancy (SF)	Total Vacancy (%)
1	New York	75.8M	16.1%
2	Washington, D.C.	74.0M	20.8%
3	Chicago	63.2M	23.5%
4	Dallas	53.5M	25.0%
5	Houston	49.3M	25.6%
6	Los Angeles	47.1M	24.1%
7	New Jersey	43.3M	25.8%
8	Atlanta	38.1M	21.6%
9	Boston	31.8M	19.1%
10	Philadelphia	27.8M	18.8%
11	Denver	27.3M	21.6%
12	Phoenix	25.2M	23.9%
13	San Francisco	22.8M	26.4%
14	Seattle	21.4M	17.7%
15	Minneapolis	19.9M	19.7%
16	Detroit	18.0M	19.3%
17	Orange County	17.7M	17.6%
18	Salt Lake City	13.9M	18.5%
19	Kansas City	13.8M	20.8%
20	Pittsburgh	13.8M	21.8%
21	Charlotte	13.7M	20.6%
22	Austin	13.6M	18.9%
23	Baltimore	13.1M	18.2%
24	Portland	12.8M	17.5%
25	Silicon Valley	12.1M	17.3%
26	Oakland–East Bay	11.7M	22.0%
27	San Diego	10.7M	12.3%
28	St. Louis	10.5M	21.9%
29	Cincinnati	10.1M	21.4%
30	Sacramento	9.9M	19.6%
31	Fairfield County	9.7M	25.4%
32	Columbus	9.7M	21.7%
33	Milwaukee	9.2M	24.0%
34	Nashville	9.0M	18.9%
35	Raleigh-Durham	8.9M	15.2%
36	Indianapolis	8.6M	22.4%
37	Tampa	8.2M	17.2%
38	Fort Worth	7.6M	16.7%
39	Miami	7.6M	16.2%
40	Cleveland	7.3M	18.3%
41	San Antonio	7.2M	17.8%
42	Long Island	6.3M	15.2%
43	Westchester County	5.8M	22.1%
44	Jacksonville	5.4M	18.6%
45	Orlando	5.0M	13.3%
46	San Francisco Peninsula	4.4M	13.3%
47	Richmond	4.3M	13.3%
48	Fort Lauderdale	4.3M	16.1%
49	North San Francisco Bay	4.0M	18.3%
50	Louisville	3.6M	16.8%
51	Des Moines	3.2M	12.0%
52	Hampton Roads	3.1M	14.7%
53	West Palm Beach	2.4M	10.3%
54	Grand Rapids	1.8M	13.2%
	United States	962.5M	20.2%

Numbers may not total 100 due to rounding.

New York has roughly 76 million square feet of empty office space. If this were stacked as a single office building, it would stretch 7 miles into the atmosphere. In 2019, the office sector accounted for about a third of all jobs in the city.

Falling closely behind is Washington, D.C. with a 21% vacancy rate—8% higher than what is typically considered healthy. Occupiers are downsizing given remote work trends, yet some office buildings are being converted to residential properties, curtailing vacancy rates.

Across 54 markets in the dataset, San Francisco has the highest vacancy rate at over 26%. Prior to the pandemic, vacancy rates were about 4%. This year, Salesforce walked away from a 30-story tower in downtown San Francisco spanning 104,000 square feet in an effort to cut costs.

Overall, rising interest rates and higher vacancies have hurt U.S. office markets, with many cities potentially seeing an uptick in vacancies going forward.

Empty Office Space: Impact on Banks

Office building valuations are projected to fall 30% in 2023 according to Richard Barkham, global chief economist at CBRE Group.

A sharp decline in property values could potentially result in steep losses for banks. This is especially true for small and regional banks that make up the majority of U.S. office loans. Big banks cover roughly 20% of office and downtown retail totals.

Consider how commercial real estate exposure breaks down by different types of banks:

Bank Assets	Commercial Real Estate Loans % of Total Assets	Share of Industry Assets
<$100M	11.3%	0.2%
$100M-$1B	26.9%	4.7%
$1B-$10B	32.5%	9.7%
$10B-$250B	18.1%	30.1%
>$250B	5.6%	55.5%

Source: FitchRatings

For big banks, a recent stress test by the Federal Reserve shows that a 40% decline in commercial property values could result in a $65 billion loss on their commercial loan portfolios. The good news is that many big banks are sitting on healthy capital reserves based on requirements set in place after the global financial crisis.

Smaller banks are a different story. Many have higher loan concentrations and less oversight on reserve requirements. If these loan portfolios deteriorate, banks may face a downgrade in ratings and higher credit losses.

Additionally, banks with loans in markets with high vacancy rates like San Francisco, Houston, and Washington, D.C. could see more elevated risk.

How High Rates Could Escalate Losses

Adding further strain are the ramifications of higher interest rates.

Higher rates have negatively impacted smaller banks’ balance sheets—meaning they are less likely to issue new loans. This is projected to cause commercial real estate transaction volume to decline 27% in 2023, contributing to lower prices. Banks have already slowed lending for commercial real estate in 2023 due to credit quality concerns.

The good news is that some banks are extending existing loan terms or restructuring debt. In this way, banks are willing to negotiate new loan agreements to prevent widespread foreclosures from hurting their commercial loan portfolios. Short-term extensions on existing loans were often seen during the global financial crisis.

Still, foreclosures could take place if restructuring the loan doesn’t make financial sense.

Overall, only so many banks may be willing to wait out the uncertainty with loan extensions if fundamentals continue to worsen. Offices that are positioned to weather declines will likely have better quality, location, roster of tenants, and financing structures.

The post Visualizing 1 Billion Square Feet of Empty Office Space appeared first on Visual Capitalist.

Brand Reputations: Ranking the Best and Worst in 2023

A company’s reputation has become incredibly important in today’s world, where consumers, investors, and stakeholders are more discerning than ever.

That’s why the Axios Harris Poll 100 has been measuring the reputations of the most visible companies in the United States for over two decades. In the graphic above, we’ve visualized the results for 2023, which are based on a survey of over 16,000 Americans from a nationally representative sample.

Data and Highlights

Each company’s score in the ranking is based on nine underlying categories. These are Character, Trajectory, Trust, Culture, Ethics, Citizenship, Vision, Growth, and Products & Services.

The top 10 of the Axios Harris Poll 100 come from a mix of industries including retail, technology, and automotive.

2023 Rank		Company	Score	Score Category
#1		Patagonia	83.5	Excellent
#2		Costco	82.1	Excellent
#3		John Deere	82.0	Excellent
#4		Trader Joe's	81.7	Excellent
#5		Chick-fil-A	81.4	Excellent
#6		Toyota	81.0	Excellent
#7		Samsung	81.0	Excellent
#8		Amazon	80.7	Excellent
#9		USAA	80.6	Excellent
#10		Apple	80.6	Excellent

Patagonia takes the top spot overall, ranking first in the Character, Trajectory, Ethics, Citizenship, and Products & Services categories. The outdoor clothing brand has many social initiatives, including a self-imposed Earth tax that provides financial support to nonprofit environmental protection groups.

Costco is another highly ranked retailer, snagging first place in the Trust, Culture, and Growth categories. The company is famous for its unique warehouse-style stores, and is growing its international presence. As of June 2023, Costco had 854 locations in total, with 267 outside of the U.S.

If you’ve been keeping count, these two brands have claimed #1 in eight out of the nine underlying categories. The last category, Vision, goes to fast food restaurant chain Chick-fil-A.

In addition to its chicken sandwiches, Chick-fil-A is widely known for its corporate culture of care, where employees are treated more like family than just workers.

Biggest Reputation Drops

Brands that took the biggest reputational hits in 2023 were Taco Bell (-20), Netflix (-20), Target (-21), Chrysler (-22), and Tesla (-50).

Looking closer at Netflix, the company scores “excellent” in Products & Services, but only “good” in terms of Character and Citizenship. It’s possible that the company’s decision to crack down on password sharing may have negatively impacted its reputation.

Tesla took the biggest hit this year, and a closer look at its category scores reveals some interesting takeaways.

With an “excellent” score in Products & Services, Vision, and Trajectory, it’s safe to assume that consumers still view Tesla as a pioneer in electric vehicles.

Where the firm has fallen, however, is in Character, Trust, and Citizenship, which may have something to do with public perception of CEO Elon Musk. The outspoken billionaire has become increasingly active on social media in recent years, and this may be rubbing some consumers the wrong way.

Tesla’s reputation may have also taken a hit after it announced significant price cuts in early 2023, which angered many recent buyers that had paid a higher price.

The post Brand Reputations: Ranking the Best and Worst in 2023 appeared first on Visual Capitalist.

The Most Profitable U.S. Companies, by Sector

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U.S. corporate profits hit record levels in 2022, even as stocks fell into a bear market and inflation reached 40-year highs.

Given these headwinds, investors are watching corporate fundamentals very closely. Corporate profit margins provide a buffer against higher borrowing costs and price pressures and for many reasons, they are a key measure of financial health.

This graphic shows America’s most profitable companies by sector, using data from Fortune.

America’s Most Profitable Companies

Here are the U.S. firms with the highest annual profits in their sector. Data is based on the fiscal year ending on or before January 31, 2023 across companies in the Fortune 500.

Both public and private companies that are incorporated and operate in the U.S. are included.

Name	Sector	2022 Annual Profit	Annual % Change
Apple	Technology	$99.8B	5.4%
Exxon Mobil	Energy	$55.7B	141.9%
JPMorgan Chase	Financials	$37.7B	-22.1%
Pfizer	Health Care	$31.3B	42.7%
Verizon Communications	Telecommunications	$21.3B	-3.7%
Home Depot	Retailing	$17.1B	4.1%
Visa	Business Services	$15.0B	21.5%
Procter & Gamble	Household Products	$14.7B	3.0%
Tesla	Motor Vehicles & Parts	$12.6B	127.5%
UPS	Transportation	$11.5B	-10.4%
Coca-Cola	Food, Beverages & Tobacco	$9.5B	-2.3%
Nucor	Materials	$7.6B	11.4%
Deere	Industrials	$7.1B	19.6%
McDonald's	Hotels, Restaurants & Leisure	$6.2B	-18.1%
Nike	Apparel	$6.0B	5.6%
DuPont	Chemicals	$5.9B	-9.3%
D.R. Horton	Engineering & Construction	$5.9B	40.3%
Lockheed Martin	Aerospace & Defense	$5.7B	-9.2%
Netflix	Media	$4.5B	-12.2%
Walgreens Boots Alliance	Food & Drug Stores	$4.3B	70.6%
W.W. Grainger	Wholesalers	$1.5B	48.3%

Apple is the most profitable company in America. Reaching almost $100 billion in profits in 2022, it outpaces the profit leaders in both the energy and financials sectors combined. Furthermore, at the end of 2022, its net profit margin stood at nearly 25%.

Amid a maturing smartphone market, the company is focusing more on service-based revenue. iPhones make up roughly half of its total net sales, yet growth is plateauing. Last year, iPhone sales growth was 7%, compared to 39% the year before. Meanwhile, services sales—including cloud, AppleCare, and advertising—increased 14% annually.

Within the energy sector, Exxon Mobil took the top spot with record profits of over $55 billion. Profits jumped almost 142% last year as oil prices spiked with Russia’s invasion of Ukraine. Steep cuts in costs through the pandemic also helped to bolster the company’s returns.

JPMorgan Chase saw the highest profits in the financial sector. As the nation’s largest bank by assets, it saw a sharp decline in its investment banking division as higher interest rates made financing mergers and acquisitions less lucrative. Overall, profits sank more than 22% annually.

Corporate Profits in Perspective

Low taxes and interest rates contributed to about one-third of profit growth across nonfinancial companies in the S&P 500 over the last 20 years, a paper from the Federal Reserve shows.

Now, as interest rates climb higher, steeper costs could cut into bottom lines. The good news is so far, corporations have shown resilience to a shifting interest rate regime. In the first quarter of 2023, U.S. corporate profits fell moderately by just over 5%.

Profitability and Competitive Advantage

What does this mean for investors?

For investors looking for companies that can weather higher rates, profitability is one factor to consider. Companies with strong profitability can reinvest in their business, pay dividends, and better withstand road bumps from rising costs.

Going further, companies with high profitability often have a strong market share thanks to economies of scale lowering costs, brand loyalty driving demand, and economic moats. We can see this with Apple and Visa, for example.

Over time, this builds a sustainable competitive advantage. As companies preserve profitability, it adds value to shareholders, often supporting share prices over the longer-term.

The post Ranked: The Most Profitable U.S. Companies, by Sector appeared first on Visual Capitalist.

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How Big is the Market for Crude Oil?

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While the global economy relies on many commodities, none come close to the massive scale of the crude oil market.

Besides being the primary energy source for transportation, oil is a key raw material for numerous other industries like plastics, fertilizers, cosmetics, and medicine. As a result, the global physical oil market is astronomical in size and has a significant economic and geopolitical influence, with a few countries dominating global oil production.

The above infographic puts crude oil’s market size into perspective by comparing it to the 10 largest metal markets combined. To calculate market sizes, we used the latest price multiplied by global production in 2022, based on data from TradingEconomics and the United States Geological Survey (USGS).

Note: This analysis focuses on raw and physical materials, excluding derivative markets and alloy materials like steel.

How Big Is the Oil Market?

In 2022, the world produced an average of 80.75 million barrels of oil per day (including condensates). That puts annual crude oil production at around 29.5 billion barrels, with the market size exceeding $2 trillion at current prices.

That figure dwarfs the combined size of the 10 largest metal markets:

Based on prices as of June 7, 2023.

The combined market size of the top 10 metal markets amounts to $967 billion, less than half that of the oil market. In fact, even if we added all the remaining smaller raw metal markets, the oil market would still be far bigger.

This also reflects the massive scale of global oil consumption annually, with the resource having a ubiquitous presence in our daily lives.

The Big Picture

While the oil market towers over metal markets, it’s important to recognize that this doesn’t downplay the importance of these commodities.

Metals form a critical building block of the global economy, playing a key role in infrastructure, energy technologies, and more. Meanwhile, precious metals like gold and silver serve as important stores of value.

As the world shifts towards a more sustainable future and away from fossil fuels, it’ll be interesting to see how the markets for oil and other commodities evolve.

The post How Big is the Market for Crude Oil? appeared first on Visual Capitalist.

Ranking the Most Competitive Countries Around the World

Just as a well-made ship needs fair weather for a smooth voyage, businesses need a supportive ecosystem to start and stay successful.

Rankings for the most competitive countries attempt to quantify this support directly, seeing which economies have the best frameworks for business to thrive. Examining how the rankings change over time can also tell us a lot about how countries are progressing relative to others.

In the above graphic, Julie Peasley uses the World Competitiveness Ranking report by the International Institute for Management Development (IMD) to chart the top 20 most competitive countries between 2019 and 2023.

How is Business Competitiveness Measured?

IMD examines countries on the basis of four metrics across multiple sub-factors:

• Economic performance:
  Domestic economy, international trade, international investment, employment, prices
• Government efficiency:
  Public finance, tax policy, institutional framework, business legislation, societal framework
• Business efficiency:
  Productivity & efficiency, labor market, finance, management practices, attitudes & values
• Infrastructure:
  Basic infrastructure, technological infrastructure, scientific infrastructure, health & environment, education

These metrics are scored on a mix of hard statistics, surveys from partner institutes, and supplementary data.

Which Countries are the Best and Worst for Business?

Denmark holds on to the top spot as the most business-friendly country in 2023, after it ranked number one for the first time in 2022. The Scandinavian country has been a perennial top 10 performer since 2018 but really began its ascent to the summit in the last four years.

The country excels in the categories of business efficiency, government efficiency, and infrastructure metrics, despite comparatively average economic performance next to some of its geographic peers.

Rank (2023)	Country	2019	2020	2021	2022
1	Denmark	8	2	3	1
2	Ireland	7	12	13	11
3	Switzerland	4	3	1	2
4	Singapore	1	1	5	3
5	Netherlands	6	4	4	6
6	Taiwan	16	11	8	7
7	Hong Kong	2	5	7	5
8	Sweden	9	6	2	4
9	U.S.	3	10	10	10
10	UAE	5	9	9	12
11	Finland	15	13	11	8
12	Qatar	10	14	17	18
13	Belgium	27	25	24	21
14	Norway	11	7	6	9
15	Canada	13	8	14	14
16	Iceland	20	21	21	16
17	Saudi Arabia	26	24	32	24
18	Czech Republic	33	33	34	26
19	Australia	18	18	22	19
20	Luxembourg	12	15	12	13
21	China	14	20	16	17
22	Germany	17	17	15	15
23	Israel	24	26	27	25
24	Austria	19	16	19	20
25	Bahrain	N/A	N/A	N/A	30
26	Estonia	35	28	26	22
27	Malaysia	22	27	25	32
28	South Korea	28	23	23	27
29	UK	23	19	18	23
30	Thailand	25	29	28	33
31	New Zealand	21	22	20	31
32	Lithuania	29	31	30	29
33	France	31	32	29	28
34	Indonesia	32	40	37	44
35	Japan	30	34	31	34
36	Spain	36	36	39	36
37	Kazakhstan	34	42	35	43
38	Kuwait	N/A	N/A	N/A	N/A
39	Portugal	39	37	36	42
40	India	43	43	43	37
41	Italy	44	44	41	41
42	Slovenia	37	35	40	38
43	Poland	38	39	47	50
44	Chile	42	38	44	45
45	Cyprus	41	30	33	40
46	Hungary	47	47	42	39
47	Türkiye	51	46	51	52
48	Romania	49	51	48	51
49	Greece	58	49	46	47
50	Croatia	60	60	59	46
51	Latvia	40	41	38	35
52	Philippines	46	45	52	48
53	Slovak Republic	53	57	50	49
54	Jordan	57	58	49	56
55	Peru	55	52	58	54
56	Mexico	50	53	55	55
57	Bulgaria	48	48	53	53
58	Colombia	52	54	56	57
59	Botswana	N/A	N/A	61	58
60	Brazil	59	56	57	59
61	South Africa	56	59	62	60
62	Mongolia	62	61	60	61
63	Argentina	61	62	63	62
64	Venezuela	63	63	64	63

Close behind in second place is Ireland, jumping five spots since 2019. The country’s strong economic performance helped it break into the upper echelon after bouncing around the top-15 rankings in the last few years.

Ranked third is Switzerland which has been in the top five since 2018, and reached first place in 2021. While the country scores well on several key indicators, it loses points on subfactors like the lack of business development and IPO offerings.

Singapore, which also was previously ranked as the most competitive country in 2019 and 2020, secured fourth place in 2023. In contrast to Denmark and Switzerland, the Asian financial heavyweight scores well on economic performance but loses ground on government efficiency.

At the bottom of the list, Venezuela, Argentina, and Mongolia face significant challenges in business competitiveness in 2023. These countries suffer from a trifecta of poor economic performance, low business and government efficiency, and substandard infrastructure, hindering business growth and development. Macro developments also play a key factor in their fortunes. For example, Mongolia has suffered in the aftermath of sanctions on Russia, a key trade partner.

Changing Rankings for the Most Competitive Countries

Though some countries have placed consistently in the rankings of the most competitive countries, there are also countries that have seen more noteworthy fluctuations.

China and Germany were both in the top 20 rankings pretty consistently until 2022, but both fell just short of that benchmark in the 2023 rankings.

And the U.S. is still in the top 10 but has dropped six spots compared to other economies in the last five years. The country’s economic might is unimpeachable, but rankings slipped in the business landscape and government efficiency metrics.

Here are the five-year changes in rankings for all countries scored in the IMD report, sorted from biggest increase to largest decrease:

Country	Change (2019-2023)	Rank (2023)
Czech Republic	+15	18
Belgium	+14	13
Taiwan	+10	6
Croatia	+10	50
Saudi Arabia	+9	17
Estonia	+9	26
Greece	+9	49
Denmark	+7	1
Ireland	+5	2
Finland	+4	11
Iceland	+4	16
Türkiye	4	47
India	3	40
Italy	3	41
Jordan	3	54
Switzerland	+1	3
Netherlands	+1	5
Sweden	+1	8
Israel	+1	23
Hungary	+1	46
Romania	+1	48
South Korea	0	28
Spain	0	36
Portugal	0	39
Slovak Republic	0	53
Peru	0	55
Mongolia	0	62
Australia	-1	19
Brazil	-1	60
Venezuela	-1	64
Qatar	-2	12
Canada	-2	15
France	-2	33
Indonesia	-2	34
Chile	-2	44
Argentina	-2	63
Singapore	-3	4
Norway	-3	14
Lithuania	-3	32
Kazakhstan	-3	37
Cyprus	-4	45
Hong Kong	-5	7
UAE	-5	10
Germany	-5	22
Austria	-5	24
Malaysia	-5	27
Thailand	-5	30
Japan	-5	35
Slovenia	-5	42
Poland	-5	43
South Africa	-5	61
U.S.	-6	9
UK	-6	29
Philippines	-6	52
Mexico	-6	56
Colombia	-6	58
China	-7	21
Luxembourg	-8	20
Bulgaria	-9	57
New Zealand	-10	31
Latvia	-11	51
Bahrain	N/A	25
Kuwait	N/A	38
Botswana	N/A	59

The Czech Republic and Belgium have made huge strides in improving their business environments since 2019, moving up 15 and 14 spots in the rankings over the last half a decade, respectively.

Saudi Arabia has also been making steady gains thanks to a series of pro-business reforms in recent years. Together with the Czech Republic, 2023 marked the first year both countries cracked the top 20 list for the most competitive countries.

On the other hand, Latvia and New Zealand have slipped the most in competitiveness, dropping 11 and 10 spots respectively. Latvia and its Baltic neighbors are dealing with a tough geopolitical environment and risk of a recession with instability in the region, while New Zealand was noted as dealing with both a brain drain and a lack of resiliency to climate change.

An Examination of Business Competitiveness

Business competitiveness is one of many measurements for country performance, including gross domestic product (GDP), income, livability, and even happiness rankings.

And as with other measurements, it is important to consider the nuances and disparities among countries when applying a one-size-fits-all ranking system.

For instance, the most populous countries rank comparatively poorer. The U.S. ranks #2 when only considering countries with a population greater than 20 million, and China is the most competitive country with a GDP per capita of less than $20,000.

And while criticisms about the subjectivity of these rankings may be valid, looking at these kinds of breakdowns can bring unique insights to broad sociological questions, and be used as a tool to help policymakers.

The post Ranked: The World’s Most Competitive Countries (2019-2023) appeared first on Visual Capitalist.

Published

3 weeks ago

on

June 29, 2023

By

Jenna Ross

Graphics & Design

• Athul Alexander

How much do you know about investing during a recession? 

This knowledge is becoming more valuable as the likelihood of a U.S. recession grows. The New York Federal Reserve estimates the probability of a recession occurring within the next 12 months at 71%, up from 6% in May 2022.

Amid this economic uncertainty, this quiz from New York Life Investments can help you test your knowledge.

The first image presents a statement and you can guess whether it is “fact” or “fiction”.

#1: Timing of Stock Market Bottoms

When do you think the market low occurs during recessions? Is it before an official announcement is made?

Swipe right to see the answer and explore data from past recessions.

The S&P 500 market low occurred before the National Bureau of Economic Research (NBER) announced a recession in four of the last six recessions. The exceptions were Reagan’s Recession in 1981-1982 and the Global Financial Crisis in 2007-09, which both lasted more than a year. 

Since the NBER waits to make an announcement until they are certain a trough in economic activity has occurred, their declarations have historically happened 4-21 months after a recession has started. 

Investors should avoid fear-based portfolio decisions when a recession announcement is made because, in the past, the worst market losses have typically already occurred.

#2: Investing During A Recession

Is it a bad time to invest when economic activity is declining?

Stock markets are a leading indicator, meaning they point towards the future direction of the economy. Historically, they have begun to recover before a recession was declared over. 

In fact, S&P 500 gains averaged 40% from market lows until the date the NBER announced the end of a recession. People who avoided investing during a recession and waited until it had clearly ended would have missed out on market gains.

Not only that, stocks may be attractively priced given that price-to-earnings ratios have dipped near the beginning of most recessions since 1980. For instance, the S&P 500 P/E ratio dropped from 27.73 in January 2020 to 22.22 in March 2020.

#3: Sector Performance During Recessions

Does the performance of sectors like energy or real estate vary over the course of a recession?

The health care sector performed the best overall during the last 3 recessions, as shown by the black dots. We measured this by comparing the monthly return difference between each sector and the S&P 500 overall.

However, certain sectors have outperformed either at the start or end of recessions. Financials and real estate were some of the worst-performing sectors, but saw strong rebounds near the end of economic downturns. For instance, real estate had monthly returns nearly 6% higher than the S&P 500 during the last 3 months of recessions.

Given that the exact timing of a recession is hard to determine in real time, investors may want to consider diversifying their sector exposure.

Making Informed Decisions

While economic downturns can make investors fearful, history has given us insights into investing during a recession.

• Avoid panic selling: The worst market losses have typically already occurred by the time a recession is officially announced.
• Explore market opportunities: If an investor waited to invest until there were clear signs a recession was over, they would have missed out on market gains.
• Diversify sector exposure: Sectors like energy outperformed at the start of recessions, while sectors like real estate rebounded at the end.

By considering these tips, investors may be better positioned to remain resilient.

The Conference Board Leading Economic Index is an American economic leading indicator intended to forecast future economic activity. The New York Federal Reserve Probability of U.S. Recession is based on the difference between the 10-year and 3-month Treasury rates. The S&P 500 Index is an unmanaged index that is widely regarded as the standard for measuring large-cap U.S. stock market performance. The National Bureau of Economic Research (NBER) traditionally defines a recession as a significant decline in economic activity that is spread across the economy and that lasts more than a few months. The S&P 500 Communication Services Index comprises those companies included in the S&P 500 that are classified as members of the GICS communication services sector. The S&P 500 Consumer Discretionary Index comprises those companies included in the S&P 500 that are classified as members of the GICS consumer discretionary sector. The S&P 500 Consumer Staples Index comprises those companies included in the S&P 500 that are classified as members of the GICS consumer staples sector. The S&P 500 Energy Index comprises those companies included in the S&P 500 that are classified as members of the GICS energy sector. The S&P 500 Financials Index comprises those companies included in the S&P 500 that are classified as members of the GICS financials sector. The S&P 500 Health Care Index comprises those companies included in the S&P 500 that are classified as members of the GICS health care sector. The S&P 500 Industrials Index comprises those companies included in the S&P 500 that are classified as members of the GICS industrials sector. The S&P 500 Information Technology Index comprises those companies included in the S&P 500 that are classified as members of the GICS information technology sector. The S&P 500 Materials Index comprises those companies included in the S&P 500 that are classified as members of the GICS materials sector. The S&P 500 Real Estate Index comprises those companies included in the S&P 500 that are classified as members of the GICS Real Estate sector. The S&P 500 Utilities Index comprises those companies included in the S&P 500 that are classified as members of the GICS Utilities sector.  It is not possible to invest directly in an index. Past performance is not indicative of future results. Different time periods may have different results. This material represents an assessment of the market environment as of a specific date; is subject to change; and is not intended to be a forecast of future events or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This material contains general information only and does not take into account an individual’s financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial professional before making an investment decision. “New York Life Investments” is both a service mark, and the common trade name, of certain investment advisors affiliated with New York Life Insurance Company. 5758918 MS40yy-06/23

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The post Fact or Fiction? Test Your Knowledge About Investing During a Recession appeared first on Visual Capitalist.

Chart: U.S. Home Price Growth Over 50 Years

This was originally posted on Advisor Channel. Sign up to the free mailing list to get beautiful visualizations on financial markets that help advisors and their clients.

U.S. home prices grew significantly in 2022, even as interest rates climbed higher.

Yet in inflation-adjusted terms, this growth rate was far lower. By Q4 2022, it fell to being flat year-on-year, making it the slowest real growth seen in a decade.

The above graphic compares nominal and real residential property price growth over 50 years based on the latest data from the Bank for International Settlements (BIS).

Nominal vs. Real Home Price Growth

In 2022, opposing forces of rising mortgage rates and a narrow supply of housing produced a moderate nominal growth rate of just over 7% as of Q4 2022. That said, real price growth dropped to 0% over the period.

Here’s how that looks in context of the recent highs and lows of housing price growth:

	Nominal Home Price Growth Year-over-Year	Real Home Price Growth Year-over-Year
Q4 2022	7.1%	0.0%
Peak	19.5% (Q1 2022)	12.9% (Q2 2005)
Low	-16.9% (Q4 2008)	-19.5% (Q3 2008)

Recent Highs: During the pandemic, growth hit almost a 20% year-over-year rate by Q1 2022, which was record home price growth at the time. It was driven by ultra-low interest rates and remote work leading people to seek out more space.

Recent Lows: In both real and nominal terms, home price growth sank to their lowest levels in 2008. The property market crashed after a wave of easing lending requirements. This flooded the market with an oversupply of houses as subprime homeowners couldn’t afford to make payments, leading prices to plummet.

Factors Influencing Home Price Growth

Today, a mix of factors are supporting nominal house prices.

First, the housing supply remains low. Total existing inventory stood at 1 million in April, under half the four-decade average. As interest rates have increased, homeowners have been hesitant to sell and the number of mortgage applications has fallen. In turn, this is pushing prices higher.

In fact, the majority of primary mortgages have interest rates locked in under 4%. As of May 4, the average 30-year fixed mortgage rate stood much higher, at 6.4%.

Along with this, new home sales are falling.

After hitting a 15-year peak in 2021, sales sank almost 27% year-over-year in April. New home sales are often considered a leading indicator for the residential market.

Wider Implications

The U.S. residential market is valued at about $45 trillion, and has historically been highly sensitive to interest rates.

While the rapid increase in interest rates haven’t yet had a major impact on housing prices, some cracks are beginning to show.

On the other hand, if prices remain stubborn, it may contribute to inflationary pressures, leading the Federal Reserve to continue with rate increases, given the market’s sheer size and influence on the overall U.S. economy.

The post Chart: U.S. Home Price Growth Over 50 Years appeared first on Visual Capitalist.

The following is an complimentary excerpt from our Markets This Month dispatch from our premium newsletter called VC+. For more like this, get a VC+ annual membership for 25% off.

Analyzing the Funds of Five “Super Investors”

With the market usually taking a breather during the summer, it’s a great opportunity to analyze how top funds positioned their portfolios at the end of Q1 2023.

We selected five funds of various sizes, each one with a renowned investor at its helm that often has a unique outlook on the market and strategy towards building out their portfolio.

The differences in portfolio compositions underline the variety of investment strategies, showing how some of the top investors approach portfolio construction.

Berkshire Hathaway has one of the world’s best known and most successful portfolios, which has significantly outperformed the S&P 500 over the long term.

While the S&P 500 has returned 195% since 2013, Warren Buffett and Charlie Munger’s fund grew by 260% over the same time period.

Although Buffett is known for preaching diversification, almost half of Berkshire’s portfolio is all in the market’s most valuable company, Apple. The rest of the portfolio is fairly diversified with a mix of bank stocks, consumer staples like Coca-Cola and Kraft, along with oil and gas companies.

Jim Simons’ hedge fund, Renaissance Technologies, is best known for its groundbreaking use of complex mathematical models and algorithms which pioneered the practice of quantitative investing.

As a result, the hedge fund’s portfolio holdings showcase astounding diversification, with the fund’s largest holding being a 2% allocation to pharmaceutical giant Novo Nordisk.

The portfolio is split across more than 3,900 different positions, showcasing the fund’s strategy of squeezing out returns from a diverse collection of investments through its algorithm-driven, statistical arbitrage approach.

Ray Dalio’s Bridgewater Associates was one of the few hedge funds to predict and successfully navigate the 2008 financial crisis, largely thanks to its “all weather” strategy which looks to perform well in all economic environments through diversification and a risk-parity approach to asset allocation.

As a result, you see many parallels and “counterweights” in the fund’s holdings. Its largest holding of MSCI’s Emerging Markets ETF is balanced out by the Core S&P 500 ETF.

Bridgewater is also one of the few funds which holds shares in a gold ETF. While other funds we’ve looked at have investments in gold royalty companies or miners, which likely have strong balance sheets and businesses to support the investment, Dalio’s fund has preferred to invest directly in the precious metal.

Stanley Druckenmiller is best known as having been a key strategist for George Soros’s Quantum Fund, along with his own consistent record of returns with Duquesne which average 30% annually.

Known for his macroeconomic approach to investing, Druckenmiller isn’t afraid to make unique and concentrated bets when he has high conviction.

Currently his highest conviction bet and largest holding in his portfolio is Coupang Inc., which is South Korea’s largest online marketplace. Along with Coupang, Druckenmiller positioned his fund to take advantage of this year’s AI boom, with significant holdings in companies like NVIDIA, Microsoft, and Alphabet.

The smallest of all five funds we looked at, Michael Burry’s Scion Asset Management might be one of the best known for its role in predicting the 2008 financial crisis early on.

The protagonist of the film, The Big Short, Michael Burry is best known for his aggressive short bets and overall value investing approach especially in distressed assets.

Scion Asset Management’s portfolio reflects this as a good portion of its holdings at the end of Q1 this year were in various bank stocks which had declined significantly throughout the month of March.

Burry’s biggest bets however are in Chinese ecommerce companies JD.com and Alibaba, indicating Burry’s belief in a consumer driven economic reopening for China this year.

Markets This Month by VC+ We hope you enjoyed this excerpt by Niccolo Conte from Markets This Month, which hits VC+ subscribers’ inboxes every month. Get 25% off an annual subscription to VC+ by clicking here.

The post What are Top Investment Managers Holding in Their Portfolios? appeared first on Visual Capitalist.

Charted: Top Destinations for Africa’s Exports (1995-2020)

Just under 30 years ago, exports originating from countries in Africa sat at $106 billion annually, primarily going to nations in the West. By 2020, Africa’s exports had more than tripled, but now with Asia as the primary destination.

The world’s second-largest continent, much of the value of Africa’s exports are concentrated in natural resources like petroleum, gold, diamonds, natural gas, and coal. Agricultural commodities like tea, coffee, and cotton also find large markets overseas.

Which countries are the top destinations for Africa’s exports?

This graphic from Sebastian Gräff uses data from Harvard University’s Atlas of Economic Complexity, the World Bank, and Bloomberg to track total exports from African countries over the years. Countries receiving a 1% or greater share of total exports have been included, and percentages have been rounded.

Tracking Africa’s Exports Between 1995 and 2005

The U.S. was the top destination for African goods for many years, led by the country’s demand for petroleum products. At its peak in 2005, the U.S. received one-fifth of the continent’s exports, valued at $55 billion.

Here’s a look at all the countries that had a 1% or greater share of Africa’s total export value at some point from 1995 to 2005.

Country	Region	1995	2000	2005
U.S.	North America	14%	18%	20%
Italy	Europe	11%	9%	8%
France	Europe	11%	8%	7%
Germany	Europe	8%	7%	5%
Spain	Europe	6%	7%	7%
UK	Europe	5%	6%	5%
Belgium	Europe	5%	3%	3%
Japan	Asia	4%	3%	3%
Netherlands	Europe	3%	3%	3%
South Korea	Asia	2%	2%	1%
India	Asia	2%	2%	1%
Portugal	Europe	2%	1%	1%
China	Asia	1%	3%	6%
Brazil	South America	1%	2%	2%
Turkiye	Asia	1%	2%	2%
Canada	North America	1%	1%	2%
Switzerland	Europe	1%	1%	1%
Zimbabwe	Africa	1%	1%	1%
Taiwan	Asia	1%	2%	1%
Saudi Arabia	Asia	1%	1%	1%
South Africa	Africa	1%	0%	1%
Côte d'Ivoire	Africa	1%	1%	1%
Hong Kong	Asia	1%	0%	0%
Austria	Europe	1%	0%	0%
Greece	Europe	1%	1%	0%
Thailand	Asia	1%	0%	0%
Singapore	Asia	1%	0%	0%
Mozambique	Africa	1%	1%	0%
Tunisia	Africa	1%	0%	0%
Indonesia	Asia	1%	1%	0%
Nigeria	Africa	0%	0%	1%
Australia	Oceania	0%	0%	1%
Botswana	Africa	N/A	1%	1%
Namibia	Africa	N/A	1%	1%
Eswatini	Africa	N/A	1%	0%
Zambia	Africa	N/A	1%	0%

Data note: Due to percentages and rounding, several countries register at 0% despite importing African goods worth several hundred millions of dollars. Furthermore, an N/A denotes either missing or no data for that country in that time period.

Western European countries—Italy, France, Spain, Germany, Belgium and the UK—also accounted for a significant share of Africa’s exports throughout this time period. Part of this was due to century-old relationships and colonial legacies, but trade was also encouraged by initiatives like the 1976 Lomé Convention, which gave products from developing African countries (particularly former colonies) duty-free access to European markets in exchange for developmental aid.

During the mid-2000s, China also started to take up a growing share of the continent’s exports, as its rapid industrialization led to skyrocketing demand for commodities such as oil, iron ore, and copper—all key African exports.

Asia’s Growing Export Share Between 2010 and 2020

By the year 2010, as African exports topped the $481 billion per year mark, the global market was rapidly starting to change.

For starters, thanks to a considerable increase in domestic oil and natural gas production, the United States began cutting back on African petroleum imports.

At the same time, China had been actively seeking resources and investment opportunities in the developing world as part of its greater geopolitical strategy. By 2015, it had surpassed the U.S. as Africa’s primary export destination, marking a shift in the continent’s trade dynamics.

Here’s a look at all the countries with a 1% or greater share of Africa’s total export value from 2010 to 2020.

Country	Region	2010	2015	2020
U.S.	North America	15%	5%	5%
China	Asia	11%	12%	15%
Italy	Europe	8%	5%	4%
Spain	Europe	6%	6%	6%
France	Europe	6%	6%	5%
India	Asia	5%	7%	6%
Germany	Europe	4%	4%	5%
UK	Europe	4%	4%	3%
Netherlands	Europe	3%	3%	3%
Japan	Asia	2%	2%	2%
Belgium	Europe	2%	2%	2%
South Africa	Africa	2%	2%	2%
Brazil	South America	2%	2%	1%
Canada	North America	2%	1%	1%
UAE	Asia	1%	3%	6%
Switzerland	Europe	1%	2%	3%
Turkiye	Asia	1%	1%	2%
Portugal	Europe	1%	1%	1%
South Korea	Asia	1%	1%	1%
Botswana	Africa	1%	1%	1%
Namibia	Africa	1%	1%	1%
Zambia	Africa	1%	1%	1%
Saudi Arabia	Asia	1%	1%	1%
Greece	Europe	1%	0%	1%
Australia	Oceania	1%	0%	1%
Zimbabwe	Africa	1%	1%	1%
Malaysia	Asia	1%	1%	1%
DRC	Africa	1%	1%	1%
Taiwan	Asia	1%	1%	0%
Nigeria	Africa	1%	1%	0%
Côte d'Ivoire	Africa	1%	1%	0%
Indonesia	Asia	0%	1%	1%
Mozambique	Africa	0%	1%	1%
Hong Kong	Asia	0%	1%	1%
Singapore	Asia	0%	0%	1%
Thailand	Asia	0%	0%	1%
Vietnam	Asia	0%	0%	1%
Russia	Europe	0%	0%	1%
Pakistan	Asia	0%	0%	1%
Poland	Europe	0%	0%	1%
Uganda	Asia	0%	0%	1%

China was joined in the top three ranks by India and the UAE, who were also experiencing rapid industrialization and growing demand for African commodities. In 2020, nearly 40% of Africa’s exports found a market in Asia, led by China and India’s significant trade volumes.

In comparison, Western Europe had started relinquish both its share and value of African goods imported. Alongside growing demand from developing countries, there became greater diversification in African export markets, with countries from Asia (Malaysia, Pakistan), Eastern Europe (Poland, Russia), and within Africa (the Democratic Republic of the Congo, Uganda), accounting for growing shares of African exports.

The Future of the African Export Market

Though Africa’s largest export markets are outside the continent for now, there is vast untapped potential for inter-regional exports, which stood at only 15% of total export value in 2020.

There is movement to expand on this trade, with the African Continental Free Trade Area (AfCFTA) established in 2018 to reduce trade barriers between African countries. According to UN estimates, it has the potential to create a $3 trillion market within the continent alone.

With one of the fastest-growing regional populations, the African continent’s economic stakes have never been higher. So who will end up dominating Africa’s trade landscape in the decades to come?

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The post Charted: Top Destinations for Africa’s Exports (1995-2020) appeared first on Visual Capitalist.