To The Moon

The year 2023 has been a challenging one for the global economy, with conflicts in Ukraine, and all sorts of troubles. However, there have been silver linings, most notably the rapid rise of artificial intelligence (AI).

Despite the ups and downs of the US and global economies, some assets and asset classes have maintained a positive trajectory, creating stunning growth and returns for investors.

As of the close on December 19, 2023, the following five assets are the best performers:

• Tech stocks

• Optional consumer stocks

• Communication stocks

• The S&P 500 index

• International stocks

1. Tech stocks

After a lackluster performance in 2022, tech stocks have made a strong comeback this year. As of December 19th, the year-to-date return of the Nasdaq Composite Index is 43.3%, with the $iShares U.S. Technology ETF(IYW)$ up a whopping 65.3%.

Many of the biggest gainers in 2023 with a market cap of $1 billion or more will be related to artificial intelligence (AI) or tech services, such as $AppLovin Corporation(APP)$, the No. 8 mobile app development platform; AI chip giant $NVIDIA Corp(NVDA)$, No. 3 supply chain AI platform $Symbotic Inc.(SYM)$, data center equipment and services provider $Vertiv Holdings LLC(VRT)$, and big data analytics company $Palantir Technologies Inc.(PLTR)$.

Analysts attribute the surge in tech stocks to the Fed's easing of interest rate hikes, coupled with the continued excitement around AI and its various applications.

2.Optional consumer stocks

Optional consumer stocks also struggled in 2022 but have bounced back strongly this year. The $Consumer Discretionary Select Sector SPDR Fund(XLY)$, an optional consumer fund managed by State Street, returned 41.7% year to date.

Some of the top-performing stocks in this sector include home builder $PulteGroup(PHM)$, up 128.1%, cruise line $Royal Caribbean Cruises(RCL)$, up 150.6%, Leisure travel services company $Carnival(CCL)$, up 132.1%, dining online Booking company $Booking Holdings(BKNG)$, up 74.4%, and home builder $D.R. Horton(DHI)$, up 70.1%.

The strong rise in optional consumer stocks in 2023 can be attributed to the slowdown in interest rate hikes, the decline in inflation in the second half of the year, low unemployment, real wage growth, and other trends. There's a saying that you should never bet against the American consumer, and it seems to be holding true this year.

3.Communication stocks

Communication stocks have also performed well in 2023, with the $Communication Services Select Sector SPDR Fund(XLC)$ returning 40.9% year to date.

Some of the core stocks in this sector, including $Alphabet(GOOG)$ $Alphabet(GOOGL)$ $Meta Platforms, Inc.(META)$ $Netflix(NFLX)$, have returned 53.7%, 191.1%, and 67.9%, respectively.

The driving force behind Alphabet's stock price increase is AI, while Meta is maintaining its investments in AI, augmented reality (AR), and virtual reality (VR) while also becoming more efficient. Netflix has seen a significant increase in paid subscriptions after introducing paid sharing measures.

The performance of communication stocks was also lackluster in 2022 but has been boosted this year by a positive economic outlook, the hype around AI, cost-cutting measures, and an uptick in advertising spending.

4. $S&P 500(.SPX)$

Low-cost index investing has become popular, friendly to individual investors, and its performance is often on par with active investing. Investing in the S&P 500 index has returned 24.2% this year, second only to tech stocks, optional consumer stocks, and communication stocks.

5.International stocks

The performance of international stocks in 2023 is also good. Among them, the $iShares MSCI ACWI ETF(ACWI)$, which invests in developed and emerging market stocks, has increased by 21.6% year to date in 2023.

By contrast, the $Vanguard Total International Stock Index Fund ETF Shares(VXUS)$, which does not invest in US stocks, has a yield of 13.9% year to date this year.

$Vanguard FTSE Developed Markets ETF(VEA)$, which focuses on developed markets (excluding the United States), has increased by 16%, while $VANGUARD INTL EQUITY INDEX FUND INC FTSE EMERGING MARKETS ETF(VWO)$, which focuses on emerging markets, has increased by 7.6% (IEMG of iShares has increased by 9.5%).