This is a weird market. Every day it seems like another stock is blowing up. Losing a quarter of its value overnight after being cut in half over the last 90 days.
Roku is a good example of this dynamic. The stock is 70% below its high in July. The stock is down 26% right now in pre-market trading. Ooof.
If I scanned through 500 charts, I might conclude that the market is down 40%. I’d be wrong. Right now the S&P 500 is down just 8.5% off its high. How? Because a lot of the stocks that are blowing up, like Roku, aren’t in the index.

So if all of these names don’t show up in the S&P 500, let’s check the Russell 1000. Actually, before we do that, let’s take a second to deconstruct the S&P 500. The most expensive names are taking it on the chin. Interestingly, the names in the middle are holding up the best.

As is almost always the case, smaller names are being hit harder than larger ones, on average.

But there are a lot of mega-caps that are getting stomped. Amazon is 18% off its highs. Disney -25%, Nvidia -29%, Tesla -30%, Salesforce -36%, Facebook -46%.
So what exactly is keeping the S&P 500 afloat? Apple, the biggest stock in the world is only down 8%. Berkshire, the 6th biggest stock is 4% off its high. United Health, J&J, Walmart, P&G, BofA, MasterCard, and Exxon, all top 20 stocks, are all within 10% of their highs. They’re giant, boring stocks, and generally don’t get that much attention. Especially compared to the Rokus of the world, which at $20 billion, just don’t move the index.
Which gets us back to the Russell 1000, the index that includes a lot of the blown-up high beta names. That’s down…8.9% from its highs. Hmm, not what I was expecting to see. Well, what if we look at the average drawdown instead of the market-cap-weighted version? The average drawdown in the S&P 500 is -17%. That number is 22% for the Russell 1000. Ding ding ding! Found the bear market.
It’s ugly out there. Index investors might not notice, but everyone else does. The big question now is, does the index catch down to the rest of the market?
We spoke about this and much more on The Compound and Friends with our amazing guests, Carleton English, and Kris Sidial.