It's Always Hard to Beat the Market

Why continue to take single stock risk?

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Learn more about the Select Sector SPDR Fund XLF.

The S&P 500 is up 15.5% year-to-date. The average stock in the index is up 6%. The median stock is up less than 5%. It’s a hard year to beat the index. What else is new?

This trend of the biggest stocks taking the lion’s share of the gains has accelerated in recent weeks, culminating with Nvidia leapfrogging both Apple and Microsoft as the largest company in the S&P 500 as of this writing.

Over the last 30 days, only 17% of S&P 500 constituents have outperformed the benchmark, by far the lowest reading of the last ten years.

While the megacap stocks are dominating, it’s important to note that the rest of the market isn’t completely unraveling. More than two-thirds of stocks in the S&P 500 are above their 200-day moving average.

I would prefer if all stocks were up 15% on the year, but this is why “blindly” following an index has become such a popular strategy. It doesn’t matter where the returns are coming from. What matters is that you have them in the first place. At least until prices are finally discovered, and Nvidia loses 95% of its value. But we’ll worry about that when it happens.

Josh and I are going to cover market breadth and much more on tonight’s What Are Your Thoughts?