Chart of Interest – A Pickup in the Heartbeat

Is it a “stock market” or a “market of stocks”?  And does it matter?  Through the years the capital markets have exhibited eras defined by various behaviors and characteristics.  These can be both interesting and, more importantly, helpful in deciphering where opportunities may lie.  This old question of a “stock market” or “market of stocks” provides interesting context for today’s equity markets.

The chart below may suggest the heartbeat of the market has jumped since the COVID selloff of 2020 and, while this may be true, a more relevant message is embedded within the data.  The top clip charts the difference in the five-day percentage change in price of S&P 500 Index members defined as “growth”, minus those defined as “value”.   

From April of 2016 to the market’s COVID high in February 2020, the difference between the rolling five-day price change of growth and value was somewhat uniform.  While growth did outperform value during this time, the annualized returns for each style were within +/-3% of the index return.  With growth leading, an investor in the lagging S&P 500 Value Index would still have been able to get roughly 80% of the broad market return (S&P 500 Index).  Arguably, being invested in the “stock market” was more important than how one was invested.

But then COVID arrived.  And, as the chart shows, the range of returns has significantly widened out. First, upping the ante for growth through August 2020, followed by a rotation to value.  With growth in favor, the value index trailed the broad S&P 500 Index by an annualized rate of 27%.  But, following the August rotation towards value, the growth index trailed the market by an annualized 9% from September 2020 through April 2021.

Big numbers? Yes, and being invested matters.  But the much larger shortfalls of the lagging styles highlight the shift towards the importance of how one invests.  For an investor today, whether styles, sectors, geography or other categorizations, the opportunity has risen for those looking to be more selective within the “market of stocks”.  And it looks as though the heartbeat will remain elevated.


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The S&P 500 Index is a stock market index based on the market capitalizations of 500 large companies having common stock listed on the New York Stock Exchange or the NASDAQ Stock Market.

S&P 500 Growth Index: The index measures growth stocks using three factors: sales growth, the ratio of earnings change to price, and momentum. S&P Style Indices divide the complete market capitalization of each parent index into growth and value segments. Constituents are drawn from the S&P 500®.

S&P 500 Value Index: The index measures value stocks using three factors: the ratios of book value, earnings, and sales to price. S&P Style Indices divide the complete market capitalization of each parent index into growth and value segments. Constituents are drawn from the S&P 500®.

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