The Other 94%

Yesterday, the S&P 500 made a new all-time high. However, of the 500 members in the index, just 6% were concurrently making 52-week highs.

This is a remarkable data point, but it doesn’t necessarily tell the whole story. What if the other 94% were just 2% from a 52-week high? They’re not, but if they were, this data point would obscure that fact.

This data point also doesn’t reveal that the median stock is 63% above its 52 week low. Most stocks might not be near a 52-week high, but they’re also very from their 52-week lows.

So how exactly are stocks doing? On an absolute basis, the median S&P 500 stock is down 3.1% year-to-date, while 56% of them are above their 200-day moving average. Hardly terrible, but not great either.

On a relative basis, it’s pretty gnarly out there. 64% of the S&P 500 is under performing the index in 2020. The median level of underperformance -22%. The 64% is actually in line with historical numbers, but the magnitude (-22%) sounds high. I don’t have that data, but would love to see it if anybody does.

The only thing you really need to know to determine how a stock has performed in 2020 is by looking at its market cap. Granted, there might be a little double counting going on because I’m measuring from today, not from Jan 1, but I’m nearly certain that the numbers wouldn’t change much at all.

It’s normal to worry about the market when fewer and fewer stocks are leading the charge, but this is not a new worry, we’ve been talking about this for years.

I know this is the type of thing that doesn’t matter until it matters, but we should also consider an alternate outcome. What if a handful of the other 94% of stocks catch up? I’m not predicting that, but it’s an outcome that we have to at least be open minded to.

It’s always important to look beyond individual data points, because facts don’t always tell the whole story.

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.