It was a simple year, really. To make money, you had to do just one thing – buy stocks.
The results were mixed, however, for roughly everything else. While stocks soared, fixed-income and commodity markets were unsteady, often inhospitable. A calculated look at the past year bears this out. Here are some of the defining numbers of 2013.
The year-end closing value of the S&P 500. The U.S. index finished the year at a new record high, capping the best year since 1997 for U.S. stocks as everything went right. Corporate earnings rose and trading multiples expanded as investors gained confidence in the economic recovery. Perhaps most importantly, a certain bearded man remained in a giving mood. In its final full year under the administration of Ben Bernanke, the U.S. Federal Reserve continued to buttress the stock market through its monetary stimulus program, albeit at a pace that’s soon to be slowed.
3.03 per cent
The yield on U.S. 10-year treasuries, a two-and-a-half-year high. Long-term interest rates are beginning to come off historic lows as the Fed gradually shifts away from direct monetary stimulus and the real economy gathers momentum.
57 per cent
Increase in the Nikkei 225 index. Japanese Prime Minister Shinzo Abe came into power in late 2012 armed with a set of economic measures designed to jolt the economy out of its long slumber. Dubbed Abenomics, the spending blitz succeeded in weakening the yen and proved a major stimulant to Japanese stocks, with the index posting its largest annual gain in more than 40 years.
Twitter’s market capitalization at year-end. The social media site went public in November, tapping into a current of investor enthusiasm for all things Internet. The initial frenzy was then exceeded by a December rally that saw the shares rise by 75 per cent at one point, before moderating in the last few trading days of the year.
323 per cent
The increase in the value of Air Canada’s stock. A company that had long been the bane of many home-biased investors became the best performer on the S&P/TSX composite index in 2013. After narrowly avoiding its second bankruptcy in a decade, Air Canada is a company remade, having slashed its pension liability, cut operating costs, and reduced debt.
The price tag on Loblaw’s acquisition of Shoppers Drug Mart. In what was the biggest Canadian M&A deal of the year, Loblaw altered the retail landscape with the takeover announced in July. Combined, Canada’s largest grocery chain and largest pharmacy will be better positioned to take on competitors, both homegrown and foreign.
The value of the loonie against the U.S. dollar. After trading at par with the U.S. dollar as recently as February, the Canadian dollar recently dipped to its lowest level since May 2010. As investing in Canada is largely a commodity play, the reduced demand for resources particularly in China has manifested in a weaker loonie.
28.6 per cent
The decline in gold futures. Gold’s status as a haven for anxious investors suffered a big blow last year. The more good news that emerged in 2013, the worse the metal did. At about $1,200 (U.S.) an ounce, gold had its worst single year in more than three decades.
The so-called “taper” – the amount by which the Fed intends to reduce its quantitative easing program. In December, Mr. Bernanke announced that the Fed’s bond purchases would be reduced to $75-billion a month, starting in January. The program, which began as an emergency measure in 2008 and which is now in its third iteration, is designed to keep interest rates low and encourage investors to take on risk. They’ve done just that, in large part by investing in stocks.