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The Weight On Their Backs

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The Weight On Their Backs

Why the S&P500 rising this year is all but an illusion

Paul Cerro
May 28, 2023
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The Weight On Their Backs

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  • 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


Disclaimer: All information provided herein by Cedar Grove Capital Management, LLC (“Cedar Grove Capital”) is for informational purposes only and does not constitute investment advice or an offer or solicitation to buy or sell an interest in a private fund or any other security. An offer or solicitation of an investment in a private fund will only be made to accredited investors pursuant to a private placement memorandum and associated documents.
Cedar Grove Capital may change its views about or its investment positions in any of the securities mentioned in this document at any time, for any reason or no reason. Cedar Grove Capital may buy, sell, or otherwise change the form or substance of any of its investments. Cedar Grove Capital disclaims any obligation to notify the market of any such changes.
The enclosed material is confidential and not to be reproduced or redistributed in whole or in part without the prior written consent of Cedar Grove Capital. The information in this material is only current as of the date indicated and may be superseded by subsequent market events or for other reasons. Statements concerning financial market trends are based on current market conditions, which will fluctuate. Any statements of opinion constitute only current opinions of Cedar Grove Capital which are subject to change and which Cedar Grove Capital does not undertake to update. Due to, among other things, the volatile nature of the markets, and an investment in the fund/partnership may only be suitable for certain investors. Parties should independently investigate any investment strategy or manager, and should consult with qualified investment, legal and tax professionals before making any investment.
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The Weight On Their Backs

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