sankai
In today’s issue of the 1-Minute Market Report, I examine the damage done in September and highlight the parts of the market that were hit the hardest. I begin with the returns for the major asset classes, and then work my way down through sectors, equity groups, and individual winners and losers for September.
Major asset class performance
Here is a look at the performance of the major asset classes for the month of September and year-to-date. Asian markets continue to struggle this year, thanks in large part to the weak China market. The only asset class showing positive performance is volatility.
S&P 500 monthly returns
September was the worst month of the year, and the worst month since the pandemic crash in March 2020.
S&P 500 drawdowns
It has been a bumpy ride down this year, with six failed rally attempts. We are now 25.3% below the high water mark of January 3, 2022.
September Stats
Here is a look at the stats for September and year-to-date. In September, for every stock that was up, there were 13 that were down. This is close to an all-time record.
78% of all stocks in the S&P 1500 Composite Index are now in a bear market, with the median stock down -33.1% from its 52-week high. More than 85% of all stocks in the index are trading below their 200-day moving averages.
Equity sector performance
For this report, I use the expanded sectors as published by Zacks. They use 16 sectors rather than the standard 11. I find that using all 16 gives a fuller picture of which areas of the market are attracting the most buying and selling interest from investors.
Equity group performance
For the groups, I separate the stocks in the S&P 1500 Composite Index by shared characteristics like growth, value, size, cyclical, defensive, and domestic vs. foreign.
The top 7 stocks by market cap (big tech names, like Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG)(GOOGL)) are by far the worst performing equity group year-to-date.
September’s 10 best-performing stocks
The 10 worst-performing stocks today
Final thoughts
After an impressive and hope-inspiring 17.4% rally from June 16 to August 16, the market has given it all back, and then some. We have wiped out all of the gains from last year and a significant chunk of the gains from 2020. This raises an important question for investors – how many times do you want to earn the same dollar?
For a by-the-book, buy & hold investor, the answer is 95% of the time. By that I mean that the only time actual wealth is created is when the market makes a new, all-time high. New high days happen only 5% of the time spent in the market. The other 95% of market days are spent backing and filling.
I’m all for buy & hold, but I also believe in having a contingency plan. Investing shouldn’t be just about playing offense by staying 100% long all of the time. There is a time to play defense, as long as it’s done rationally and methodically. One of the best ways to play defense is by gradually reducing your risk exposure as the risk of recession increases. The index of leading economic indicators is a good place to start.
Are you looking for more high quality ideas? Consider joining The ZenInvestor Top 7, my Marketplace service. The Top 7 is a factor-based trading strategy. Its screening algorithm prioritizes reasonable price first, then the momentum, and finally projected earnings growth. The strategy produces 5-7 names, and rebalances every 4 weeks (13 times per year). The goal is to catch healthy companies that have gone through a rough period, and are now showing signs of making a strong comeback. Join now with a two-week free trial.
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
Be the first to comment