Looking Inside The Market

Although U.S. equity indices are hovering near all-time highs, the average stock in the Russell 3000- which covers 98% of the investable market- is already in “bear market” territory.


How can it be that the average stock is down 20% from its 52-week high while the index is just 2.9% from its all-time high? There are a handful of stocks leading the market, which actually usually happens. From 1926, the average annual return for all U.S. stocks is 9.9%. Excluding the top 10% of performers each year, the return drops to 6.5%. Excluding the top 25% of performers each year and the average annual return is gone, -0.3%.

So where does this leave us today?

Does the fact that the average stock is already in a bear market mean the indices have to catch up and move lower? Or perhaps, despite being less than 3% off all-time highs, most of the damage has already occurred and stocks have some catching up to do, pushing indices higher. You can look at all the data you want but at the end of the day, this is all conjecture. To quote the great Eddy Elfenbein, “the market is controlled by the market.”

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

The Compound Media, Inc., an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. The Power of Framing | The Irrelevant Investor commented on Aug 21

    […] of this when I was writing about how far the average stock in different indices are from their 52-week high. Although these are not exactly the same information, both of these seemingly paradoxical […]