Cedar Grove Capital Management

Share this post

The S&P's Back Hurts

www.cedargrovecm.com
Chart of the Week

The S&P's Back Hurts

S&P is up 23% YTD but not everyone is winning

Paul Cerro
Dec 20, 2021
1
Share this post

The S&P's Back Hurts

www.cedargrovecm.com

Good morning everyone đŸ‘‹đŸŒ!

If you’re reading this but haven’t subscribed, join our community of edgy investors interested in learning more about the markets and receiving recommendations on single-name stocks in various industries. Subscribe đŸ‘‡đŸŒ, it’s free!


Who’s Pulling the S&P Higher?

Source: Google Finance. Data as of 12.19.21. Note: Accounts for companies that have moved in and out of the index this year.
  • Despite stellar returns for a hard year of investing, 90 companies, or 18.4%, of the S&Ps constituents, have had negative returns YTD

  • The biggest category, those returning between +20% → +50%, make up 38.2% of all the companies in the S&P but have 46.2% weighting of the entire index

  • The average return is 23.1% compared to the median return of 21.0%

  • Top 7 holdings of the index, which happens to be large-cap tech such as Google, Meta, Microsoft, Apple, Amazon, and Tesla, have had an average return of 36.9% but make up 24.9% of the index

  • Big names with high weighting in the index are the main culprits of why the S&P has had a great run this year despite what might be happening in your portfolio

Takeaway

Don’t be fooled by the return of the index this year. There has been a huge shift from growth to value as the FED becomes more hawkish and slows down QE and anticipates rate hikes in 2021. Bigger, safer names like the ones listed in the last bullet have become investor favorites as they look for areas to park their money that shows earnings growth and pricing power in this uncertain environment.

At the end of the day, make sure you’re investing in good businesses that you understand and would hold for the long term.


One last thing!

As I look to continue growing this community, all I ask is that if you feel like you’d enjoy future content, please consider subscribing below to be up to date with my research as they happen and share with friends.

Share this post

The S&P's Back Hurts

www.cedargrovecm.com
Next
Comments
TopNewCommunity

No posts

Ready for more?

© 2023 Paul Cerro
Privacy ∙ Terms ∙ Collection notice
Start WritingGet the app
Substack is the home for great writing