The Skewed Market

The stock market this year has been unusually skewed, meaning that a small number of stocks are making up a large part of the gains. More than half the gain in the S&P 500 this year comes from just 10 stocks. Further, just three stocks — Apple, Facebook and Amazon — make up nearly one-third of the index’s gain YTD.

The recent strength in tech and internet companies marks a reversal from late last year, when investors piled into banks, industrials and small-cap stocks in the weeks following November’s U.S. elections. They bet that Republican control of Congress and the White House would lead to pro-growth policies.

But as investors began to lose confidence that the policies would be enacted quickly, these sectors have trailed the S&P 500 in recent months. Instead of focusing on companies that could outperform during faster economic growth, many investors returned to large-cap favorites with a track record for boosting revenue during slower growth periods.

On our Buy List, four stocks (CERN, AXTA, MCO, SHW) make up 57% of our YTD gain.

Posted by on April 18th, 2017 at 9:35 am

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.