Well, we're just past the midway point of the year. And if nothing changes over the next six months, 2017 will go down as a pretty good year for U.S. stocks. Through June 30, the benchmark S&P 500 had already delivered a return of 10.5%.
If it holds, that would be the strongest performance since 2013.
Unfortunately, if you don't hold a handful of large-cap tech stocks, then you probably aren't doing quite as well. You know the ones I'm referring to: Facebook (NYSE: FB), Amazon (Nasdaq: AMZN), Netflix (Nasdaq: NFLX) and Alphabet (Nasdaq: GOOG), previously known as Google.
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At the time of this writing, these four giants have posted year-to-date gains of 38.1%, 34.1%, 28.1%, and 22.2%, respectively. And they have a combined market capitalization of $1.6 trillion -- more than the entire value of some foreign markets. That heft exaggerates their influence on cap-weighted indexes.
Take them out, and the market isn't looking so hot. In fact, 819 of the 2,115 stocks listed on the New York Stock Exchange have actually lost money so far this year. Another 207 are sitting on tepid gains between 0% and 5%. That means about half the market has done little to nothing this year, or worse.
We see that reflected in the Energy Select Sector SPDR (NYSE: XLE). The fund, which holds a mix of oil & gas producers such as Chevron and Exxon Mobil, has declined 13.6% since the start of the year. And it hasn't been much better for the S&P Metals & Mining ETF (NYSE: XME), which tracks a basket of coal, aluminum, copper and precious metals stocks.
As of today, 17 of the fund's top 25 holdings are underwater. One of the exceptions, however, is one of our own holding in Scarcity & Real Wealth: Allegheny Technologies (NYSE: ATI). The company has just made a bold leap into an exciting new field, and I expect more good things to come down the road (more on that in my newsletter).
Despite these headwinds, I'm proud to see our model portfolio value outperform our closest benchmark, the VanEck Natural Resources ETF (NYSE: HAP). And we've achieved this despite the fact that half of the portfolio is in cash.
I've been cautiously slow in putting this cash to work, in part because the macro outlook hasn't exactly painted a bullish picture for most resource groups. But the cheaper these stocks get, the more I can buy with my model portfolio's $87,000 cash position.
I want to continue to add high-quality "Picks and Shovels" stocks to my portfolio. These stocks aren't as sensitive to commodity prices and can produce gains in any environment. It's been a productive first half, and I'm excited about the opportunities for even bigger gains between now and December.
Editor's Note: Nathan's point about "picks and shovels" here is key. By focusing on companies that provide the equipment (and other expertise) necessary for producers to get resources out of the ground, Nathan and his readers end up owning companies that hold up better during the lean times for commodities, partly because they are diversified into other businesses. And when things pick up, well, even better.
In Scarcity & Real Wealth, Nathan brings you his best picks across the entire natural resources spectrum, regardless of market cap or geography. One month, the biggest investment potential may lie in a mega-cap miner in Australia that's about to benefit from a surge in metal demand from China.
All of Nathan's picks are traded in the United States, making these explosive opportunities readily accessible to investors in North America and elsewhere.