Diversification can help shelter a portfolio from increases in volatility. Recently, 9 of the 11 sectors were still positive on the year, while gold was up about 10% and bonds were positive on the year.
In many cases, a diversified portfolio would still be down on the year, but it would be better than the ~10% pullback we’ve seen in the .
Diversification is one tool, relative strength is another.
Seasoned investors often look toward relative strength to find the stocks that are performing well relative to a specific benchmark. That benchmark could be vs. their sector — like how Apple (NASDAQ:) or Amazon (NASDAQ:) are performing vs. the tech sector — or against an index like the S&P 500 and .
Finding Relative Strength
The S&P 500 is down 10.1% from its record closing high, while the Nasdaq is down 13.3%. The indices are down 6.1% and 8.5% so far year to date, respectively.
Chart as of the close on 3/13/2025. Source: eToro ProCharts, courtesy of TradingView.
Notably, 9 of the 11 S&P 500 sectors are still outperforming the indices on a year-to-date basis. When excluding tech and consumer discretionary — which account for roughly 40% of the S&P 500 weighting — the worst-performing sector is industrials, down just 2.3% this year.
Let’s dig into individual stocks.
I combed through the S&P 100 — the 100 largest US companies by market cap — to find stocks that are performing well relative to the S&P 500. Here’s what we found:
- – 68 stocks are outperforming the S&P 500 on a year-to-date basis.
- – Further, two-thirds of them (46) are actually positive so far this year.
- – 30 stocks are outperforming the S&P 500 and Nasdaq 100 when it comes to the drawdown from their 52-week high.
- – Impressively, all but one of them are actually positive on the year too (except MasterCard, which is down a paltry 0.2%).
Of the 30 stocks from the second bullet point, the 10 best performers so far this year include: Phillip Morris, Gilead Sciences (NASDAQ:), Amgen (NASDAQ:), AbbVie (NYSE:), General Electric (NYSE:), 3M Co, T-Mobile, Abbott Labs (NYSE:), Medtronic (NYSE:), and AT&T (NYSE:).
The next seven — IBM (NYSE:), Johnson & Johnson (NYSE:), Coca-Cola (NYSE:), Deere (NYSE:), RTX Corp, Altria (NYSE:) and AIG (NYSE:) — are all up at least 10% this year.
The Bottom Line
I realize I threw a lot of names out there, but my point is pretty simple: Almost half of the S&P 100 is actually positive on the year. That’s not to say this environment has been easy, as many of investors’ favorite stocks and sectors are under significant pressure.
Notice how not one mega-cap tech stock in the group above. That’s not to shun tech; it’s been a great long-term performer. But it pays to look outside of this group from time to time to find the stocks that are truly performing the best.
Gold Setup
The gold ETF — GLD (NYSE:) — continues to chug higher. Shares are up more than 13% this year and have rallied more than 37% over the past 12 months.
This easily outperforms the S&P 500, which is down more than 6% this year and is up just 6.9% over the past year. Below is a look at physical gold, which is nearing $3,000 an ounce:
Chart as of the close on 3/13/2025. Source: eToro ProCharts, courtesy of TradingView.
Ideally, bulls will want to see gold prices stay above the $2,920 to $2,950 zone. On the GLD, that roughly translates about $270 to $272.
If gold moves below those levels, it’s not necessarily the end of the world, but it’s where the trend would start to lose its short-term momentum. Over the long term, though, it’s hard to deny that this asset has done quite well.
Options
For options traders, calls or call spreads could be one way to trade GLD on the long side. In these scenarios, options buyers limit their risk to the price paid for the calls or call spreads while trying to capitalize on a bounce in the stock.
Conversely, investors who expect downside could speculate with puts or put spreads.
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Disclaimer: Please note that due to market volatility, some of the prices may have already been reached and scenarios played out. Content, research, tools, and stock symbols displayed are for educational purposes only and do not imply a recommendation or solicitation to engage in any specific investment strategy. All investments involve risk, losses may exceed the amount of principal invested, and past performance does not guarantee future results.
