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Five Largest Stocks Account For Nearly Half Of 2017’s Gains

TedTed
in Fund Discussions
FYI: The market has seemed pretty top-heavy lately. We think the concerns around weak breadth have been a little bit overstated, though, as we mentioned in our Chart of the Day yesterday. But it’s still worth asking the question: how much of the market’s gain is attributable to the largest stocks? Below we show three series. The light blue line is returns for the S&P 500 YTD. In the dark blue line, we strip out the performance contribution of the five largest stocks in the S&P 500: Apple (AAPL), Facebook (FB), Amazon (AMZN), Microsoft (MSFT), and Alphabet (GOOGL). As shown, while the overall index is up almost 8% so far in 2017, it’s up only 4.6% if you strip out the five largest stocks. In the red series below we show the spread between the two, in other words, the cumulative performance contribution from those 5 stocks. At the start of the year, these five stocks accounted for 11.6% of the index’s market cap, so you’d expect a non-trivial percentage of gains to come from them. That share stands at about 13.7% today. Generating nearly half of the index’s gains with less than 15% of its market cap is an out-sized contribution and shows just how painful it can be in terms of relative performance if you’ve been underweight these mega-Tech behemoth
Regards,
Ted
https://www.bespokepremium.com/think-big-blog/five-largest-stocks-account-for-nearly-half-of-2017s-gains/

Comments

  • 275LB_NY_MCPO275LB_NY_MCPO
    There has definitely been a rotation out of U.S. small value to U.S. large growth this year...I have captured those gains with HACAX. Anyone else???
  • VintageFreakVintageFreak
    edited May 2017
    I'm more interested right now in timing overweighting small value. Using PVFIX as my barometer. If even PVFIX is going down, I'm not touching any other SV. While I will admit, like I've said before, small+energy is actually hitting PVFIX hard.

    If it is one thing I've learnt it is to be patient. I did do some movement around S&P 500 in my IRAs. Overweighted international switching some money to target funds. Eliminated Mid Cap Value, and overweighted growth with TRP Inst LG Growth (symbol escapes me).

    I have "Jennison Private Account" or some such fund. Thinking might be close to HACAX, but I don't like investing in funds without ticker.

    In an IRA I'm overweighting using TRBCX. I still have some money in cash because my ANALysis says Mid/Small is rolling over. So not fully invested.

    PS - 275 Pound New York ....WTF? Mail Chauvinist Pig OverTheHill (MCPO)? I really need to understand your Nick...
  • 275LB_NY_MCPO275LB_NY_MCPO
    I am holding SV with RYSEX, as I am not smart enough to move in and out of asset classes!
  • 275LB_NY_MCPO275LB_NY_MCPO
    Creates a visual image...like Vintage Freak!:)
  • davidrmorandavidrmoran
    It would be very cool to see what CAPE held and when wrt being in and out of those 5
  • DavidV
    Interesting, that these tech market leaders have nothing to do with Trump's stocks - industrial, financial and defense. Tax cuts if that happens would equally affect all companies, big and small. So what is a reason for that frenzy?
  • 275LB_NY_MCPO275LB_NY_MCPO
    Great question... and I cannot speak to all of these stocks, but Amazon is eating EVERYONE elses' lunch! They are now in groceries, books and are leading the charge in AI, not to mention the success of Echo! This is all besides their main business of on-line retail! I heard today that Bezos will soon be the world's richest man! They may put hundreds of companies out of business before all is said and done!
  • VintageFreakVintageFreak
    275LB_NY_MCPO said:

    I am holding SV with RYSEX, as I am not smart enough to move in and out of asset classes!

    My stupid principles keep me away from companies like WF, and serial fund creators like Royce, while they have refrained of doing this off late. Still they are owned by Legg Mason.

    If I ever feel like investing in dedicated small cap value fund, I'll probably go with big names like Fido, Vanguard, TRP. Bridgeway small and micro may be as well.
  • 275LB_NY_MCPO275LB_NY_MCPO
    @VF
    Very valid point...I have held RYSEX for quite some time, and have large CG backed in, so tax-wise I will not sell! It is one of Royce's better funds, and usually shines when market is tanking! If I was 20+ again, I would probably go with SV index fund! Thanks.
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