Five Big Engines and 495 Cabooses!
The S&P 500 is the most commonly accepted performance measuring index for Corporate America.
YTD it is up about 10%.
If you were to back out the top five, maybe six, large cap technology stocks the other 495 companies in the index are up .4% YTD. (Source: Energy and Income Advisor, Issue 219 Part B, June 2, 2023)
In other words, if you don’t own the FAANG’s (just do a search on this for detail) you are up about .40%. Our allocation and investment positions are not focused on 5-6 companies.
I have experienced this same conundrum on a few other occasions over the years. It is difficult to explain, but each time before this one either the big movers dropped, the other 495 stocks caught up or both.
This is rare but happens from time to time.
It has been my experience over time that if investors look past this unusual event, they have been rewarded, hence our reference to “Five Year Money” (Read it Here).
For those in our client family who get anxiety over this “for the moment underperformance”, they should change course ASAP, i.e., sell and go to cash.
As another reference, those who have “dollar cost averaged” into the periods like this have come out on the other side better off. No one knows when the “other side” will arrive, so if you need this money before five years then you may decide to go to cash.
I’m interested in your thoughts, comments, and observations. Feel welcome to call, email, or stop by the office and say Hi.
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.