Markets too high 2.0 - more explanations and indexing

Jul 27, 2020 | Jeremy Goldfarb


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From the investment desk

 

As mentioned previously in this blog, the SP500 has really weathered the COVID storm well since its eye-watering drop earlier this year. The average stock in the SP500 is still down about 6% year to date, but that is not what the average reflects due to its weighting process. Some charts below will help us understand more. FAANG has done most of the work.....

 

While this particular theme was more pronounced earlier on, it is nothing new. The "big getting bigger" has been a narrative for some time now, however the breadth of the market improvement since March has become better as we have progressed throughout this year. 

 

So what can we take from this as investors? 

 

Indexing as a component of the investment strategy can be an important means of obtaining broad market exposure without becoming too concentrated. Alongside an actice management strategy seaching out quality and sustainable balance sheets, a paired indexing model can be very effective. If you want to learn more about this, reach out to us. 

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Markets Investing