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

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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 SP500.20, +0.72%  is up 4%, industrials SP500.20, +0.72% 3.9%, communications services SP500.50, +0.12% SP500.50, +0.12% 3.2%, utilities SP500.50, +0.12% SP500.55, -0.37%  and real estate SP500.60, +0.06%  down 2.4% and 2.8% respectively, and consumer staples SP500.30, +0.18%  up 0.5%, he notes.

Stovall’s Pacer CFRA-Stovall Equal Weight Seasonal Rotation exchange-traded fund SZNE, +0.98%  (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 VIG, +0.40%  and the iShares Core Dividend Growth DGRO, +0.69%.

The market

Another record-beating day might be a stretch, with Dow YM00, +0.01%, S&P ES00, -0.01%   and Nasdaq NQ00, +0.00%  futures flat two days from Thanksgiving. European stocks SXXP, -0.01% are slipping and Asian markets ADOW, +0.28% finished mixed on Monday.

The chart

Demand for haven investments has been waning as stocks keep reaching out new highs. With that, gold GC00, +0.09%  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 buzz

Pharmaceutical group ChemoCentryx CCXI, +1.51% is up 300% after announcing a “transformational” drug result.

Shares of Hewlett Packard Enterprise HPE, +1.93%  are down after the computing company’s revenue disappointed. Earnings from retailers Dollar Tree DLTR, +3.07%, Dick’s Sporting Goods DKS, +0.05%  and Best Buy BBY, +2.22%  are ahead, with computer makers Dell DELL, +2.70%  and HP HPQ, +1.05%  due after the close.

Marijuana producers Aurora Cannabis ACB, -6.67%, Cronos CRON, -2.34%  and Canopy Growth CGC, +0.22%  dived late on Monday after the Food and Drug Administration warned cannabis derivative CBD could be harmful for users.

Shares of e-commerce group Alibaba BABA, +1.96% surged in their Hong Kong debut.

The quote

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.

The economy

Advance trade in goods, a home price index, consumer confidence data and new home sales are ahead. Late on Monday Federal Reserve Chairman Jerome Powell sketched an optimistic view of the economy.

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