Happy Anniversary Bull Market

JC Parets
October 16, 2023

How come so many investors get mad that an index, which was designed to buy more of the best stocks and less or none of the worst stocks, owns more of the best stocks and less or none of the worst stocks?

The S&P500 is up over 21% since the October low last year. In fact, last week marked the 1 year anniversary of this bull market.

Meanwhile, the Nasdaq100 is up 40% over the past 12 months (because it's a bear market?)

During this time, Technology is up 46%, Communications is up 42% and Industrials are up 22% - representing the 3 best performing groups of stocks.

Meanwhile, the worst performers are Utilities, Consumer Staples and Real Estate.

Go back and study all the bull markets throughout history. You know what you'll find? The leaders tend to be the stocks leading this cycle. And the laggards tend to be the stocks lagging this cycle.

So what's the problem?

The S&P500 is designed to own more of the best stocks and very little or none of the worst stocks.

And it's doing its job really well isn't?

Not according to some....

In my opinion, the sad investors are the ones stuck in the wrong stocks. If you've been long the strongest names, like the S&P500 has, for example, then you have little to complain about.

But here is an index that represents the median stock, closing last week at the lowest levels in a year.

If you want to be a subpar investor, then own the median stock.

It's simple.

The median stock, according to the Value Line Geometric Index, has made zero progress in 25 years.

So if you're focused on the median stock, then of course you think it's a bear market.

But when you understand how the best strategies own more of the best stocks and little or none of the worst stocks, you'll quickly see how this is just a perfectly normal bull market.

Is it one of the strongest Year 1s of a bull market? No, it's actually one of the worst Year 1s on record. But a weaker bull market doesn't necessarily make it a bear market.

Also, I encourage you to go back and look. There's no evidence that a weaker Year 1 of a bull has any impact on the performance of Year 2.

So at this point, it doesn't even matter.

We want to look forward. And so we want to own the best names as we get ready for the strongest time of the year to own equities.

We'll be discussing everything tomorrow night - Tuesday 6PM ET.

This is our LIVE Mid-Month Conference call and Premium Members can REGISTER HERE.

Bring your questions!

JC

 

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