From this past Tuesday’s blog:
“It’s been a pretty weak year so far in 2018 with the S&P up about 4%, and the vast majority of those gains have come from just a handful of names. Remove those and pretty much all the gains vanish. For example the Dow Jones is less tech heavy and it’s flat for the year.”
That wasn’t hyperbole. Nearly all of the S&P 500 performance this year has come from just 6 companies.
Percentage contribution to S&P 500 performance in 2018:
The other 494 companies (499 stocks) in the S&P 500 have not contributed anything to this years performance. Now there’s two ways people will view this information:
The bulls: When the rest of the companies in the index start performing well, we’re off to new all time highs!
The bears: As soon as the big tech names stop producing we’ll see a major correction!
(I don’t know why writing that just triggered an old random memory but remember that old Bill Swerski’s super fans Saturday Night Live sketch with the Chicago Bulls and Chicago Bears fans? Da Bulls! Daaaa Bears!)
Anyway there’s clearly a way for everybody to see what they want to see in this information but like most things in the investment world, it’s just a piece of the puzzle and on it’s own shouldn’t turn anyone bullish or bearish.
However it is a fact that there have been very few pockets of success so far in 2018. Stocks are up due to 6 companies. Bonds are down. Gold is down. Real estate is pretty flat. Emerging markets are down. MLP’s are down. Unless an investor had their entire portfolio in tech and energy, they are likely flat or down this year. It’s not been pretty and that’s also been reflected by Hedge Fund performance being dismal yet again.
I’m a broken record at this point but I’ve said it a million times. Successful investing is already hard in the best of times, but with stocks near all time highs and interest rates on the rise, looking forward I suspect it’s about to get a lot more difficult for traditional investors. We just need to keep our head down and focus on our speciality areas and not worry about what everyone else is doing.
Have a fantastic weekend everyone! I’m going to check out the Richmond night market here in Vancouver and see if I can bring a little bit of my old Taiwan life home to Canada.
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