3 Primary Headlines:
- Value investing is dead as low-priced companies get punished late Q2.
- Speculation is alive as high priced companies flourish…..what pandemic?
- Concentration of returns is back….which distorts indices.
“In the short-run the market is a voting machine but in the long run, it is a weighing machine” -Ben Graham
What is the performance of the markets YTD 2020? Depends on what index is used and the definition of the market. The S&P 500 index is increasingly influenced by recent concentration of returns among 10 holdings and is not presently representative of the market as a whole. If the intent of understanding market performance is based on the weight of some fundamental economic contribution, like net income, then no single index will presently adequately summarize the environment. Therefore, one must dig deeper at the industry and price level to gain better context especially in a pandemic induced world.
