YTD the S&P 500 is up 17.8%. Cool.
But is the average stock up 17.8%?
Consider the trend in the number of S&P 500 companies reaching new 52-week highs:
Notice something? Fewer stocks are participating. Currently about 35 stocks are making new highs. That’s 7% of the companies that comprise the index.
The cause? Cap-weighted index construction where fewer and fewer stocks account for greater and greater percentages of total index return due to the size of the company. We wrote about it here and here.
So, is the S&P doing well or a handful of stocks? You sure you want to be an indexer? You sure you want to own 500 stocks when 93% of them can’t keep up? Hmmm…
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