Since the start of the year, the S&P 500 is up nearly 10% (as of Friday). Debunking the bears so far — including me — that 2023 was going to be a tough one.
Despite an overall positive return, the median stock is down -0.2%. More stocks in the index are down than up.
Currently, the top 10 stocks in the S&P account for 30% of the index.
Apple and Microsoft, which together account for 14% of the S&P, have each returned 32% in 2023. Third-largest firm Alphabet is up 39%. And No. 5 firm NVIDIA has logged an eye-watering 110% return.
The takeaways here that I want to leave you with are
Don’t take everything at face value until you really know what’s under the hood.
Market cap weighted indexes are BS but are great for diversification of risk.
Perhaps some things are getting a little “too rich” when it comes to the health of the economy and the markets.
“We’ve seen this move back to mega-caps, which lifts the overall index. It’s sort of the generals leading the charge where most of the soldiers are falling behind.”
- Liz Ann Sonders, managing director and chief investment strategist at Charles Schwab.
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Until next time,
Paul Cerro | CIO of Cedar Grove Capital
Personal Twitter: @paulcerro
Fund Twitter: @cedargrovecm
HoldCo Twitter: @cedargrovech
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