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Nov. 26, 2019, 5:58 p.m. EST

These stocks and ETFs will help investors survive a ‘not great’ year, says top Wall Street strategist

Critical information for the U.S. trading day

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By Barbara Kollmeyer, MarketWatch


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Will the bull struggle in 2020?

Surprised by the fact that U.S. stocks are on track for double-digit percentage gains this year?

Here’s one explanation from Sam Stovall, research company CFRA’s chief investment strategist. “It’s the third year of a presidential term in office, which historically is the strongest of the four-year presidential cycle,” he told MarketWatch in a recent telephone interview.

Since World War II, stocks have gained 16% and risen 84% of the time in year three, he says. As for year four, the average gain has been 6.3%, with markets up 78% of the time.

“It’s a good year, not a great one,” said Stovall, who also provides our call of the day and some strategies to cope with that outlook.

Here’s one for a retail investor who doesn’t have the stomach to spend 2020 reacting to geopolitical headlines. “If you’re saying you have to stick with something for a full 12 months, look at those sectors and those sub-industries that are the leaders at the end of the year,” he says.

That’s because, at least since 1990, “by sticking with winning sectors and sub-industries over the long term, you tend to outperform the broader market.”

As for sector performances, since October 31 information technology /zigman2/quotes/210600030/delayed XX:SP500.20 -0.17%  is up 4%, industrials /zigman2/quotes/210600030/delayed XX:SP500.20 -0.17% 3.9%, communications services /zigman2/quotes/210600403/delayed XX:SP500.50 -0.61% /zigman2/quotes/210600403/delayed XX:SP500.50 -0.61% 3.2%, utilities /zigman2/quotes/210600403/delayed XX:SP500.50 -0.61% /zigman2/quotes/210600278/delayed XX:SP500.55 +0.32%  and real estate /zigman2/quotes/210599956/delayed XX:SP500.60 +1.15%  down 2.4% and 2.8% respectively, and consumer staples /zigman2/quotes/210600216/delayed XX:SP500.30 +0.10%  up 0.5%, he notes.

Stovall’s Pacer CFRA-Stovall Equal Weight Seasonal Rotation exchange-traded fund /zigman2/quotes/200550995/composite SZNE +0.09%  (see performance here ) rotates between cyclical and defensive sectors every six months. He also suggests gravitating toward companies that have consistently paid dividends over time, via Vanguard’s Dividend Appreciation ETF /zigman2/quotes/207292160/composite VIG -0.30%  and the iShares Core Dividend Growth /zigman2/quotes/209953705/composite DGRO -0.23% .

The chart

Demand for haven investments has been waning as stocks keep reaching out new highs. With that, gold /zigman2/quotes/210034565/delayed GC00 +0.20%  is prepping for its “next leg lower,” Adam Kobeissi of industry commentary The Kobeissi Letter tells MarketWatch.


The Kobessi letter

He anticipates gold at $1,445 an ounce by year-end, and $1,380 by early 2020, citing an “incredibly bearish” backdrop for the metal.

The quote


Reuters
Historic heist in Dresden

“It’s as if someone broke into the Louvre and had taken the Mona Lisa.” — Vivienne Becker, a London-based jewelry historian and author, on a Baroque jewels heist in Germany.

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/zigman2/quotes/210600030/delayed
add Add to watchlist XX:SP500.20
XX : S&P US
707.25
-1.17 -0.17%
Volume: 162.88M
Feb. 20, 2020 5:10p
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/zigman2/quotes/210600030/delayed
add Add to watchlist XX:SP500.20
XX : S&P US
707.25
-1.17 -0.17%
Volume: 162.88M
Feb. 20, 2020 5:10p
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/zigman2/quotes/210600403/delayed
add Add to watchlist XX:SP500.50
XX : S&P US
191.80
-1.17 -0.61%
Volume: 196.05M
Feb. 20, 2020 5:10p
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/zigman2/quotes/210600403/delayed
add Add to watchlist XX:SP500.50
XX : S&P US
191.80
-1.17 -0.61%
Volume: 196.05M
Feb. 20, 2020 5:10p
loading...
/zigman2/quotes/210600403/delayed
add Add to watchlist XX:SP500.50
XX : S&P US
191.80
-1.17 -0.61%
Volume: 196.05M
Feb. 20, 2020 5:10p
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/zigman2/quotes/210600278/delayed
add Add to watchlist XX:SP500.55
XX : S&P US
356.32
+1.12 +0.32%
Volume: 71.80M
Feb. 20, 2020 5:10p
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/zigman2/quotes/210599956/delayed
add Add to watchlist XX:SP500.60
XX : S&P US
258.73
+2.95 +1.15%
Volume: 65.71M
Feb. 20, 2020 5:10p
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/zigman2/quotes/210600216/delayed
add Add to watchlist XX:SP500.30
XX : S&P US
662.73
+0.67 +0.10%
Volume: 96.45M
Feb. 20, 2020 5:10p
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/zigman2/quotes/200550995/composite
US : U.S.: NYSE Arca
$ 31.73
+0.03 +0.09%
Volume: 69,916
Feb. 20, 2020 6:30p
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/zigman2/quotes/207292160/composite
US : U.S.: NYSE Arca
$ 130.14
-0.39 -0.30%
Volume: 993,648
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/zigman2/quotes/209953705/composite
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$ 42.85
-0.10 -0.23%
Volume: 1.52M
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/zigman2/quotes/210034565/delayed
US : U.S.: Nymex
$ 1,623.70
+3.20 +0.20%
Volume: 6,222
Feb. 20, 2020 7:02p
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Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.

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