Last Week…
…ended a bit down with almost all equities slipping, excluding US Health Care.
Rather than pointing out the obvious volatility, we instead want to focus on meaningful patterns and investor behavior.
- Most bonds inched up slightly.
- We have previously noted that Small companies have taken the brunt of this downturn, also noting that Value stocks have been impacted much harder than Growth stocks.
- The worst performing asset class YTD is US Small Cap Value with US Mid Cap Value just ahead of Small Value.
Now, do we think that only Large Growth companies are going to survive this downturn? Absolutely not! Remember that small businesses, as a category, are not going to go away! Some will fail, sure, but new small businesses are already emerging in the chaos to take their place. The question is, when investors are going to feel safe shifting money back into small and value firms?
Well, it appears that ‘rotation’ began on Monday and was even presaged by last week’s performance.
- Rotation is a term referring to money leaving areas of the market that are doing well and moving to areas that have not been performing so well.
It’s a very bullish move. On Monday, there was a 6% gain in both Mid and Small Cap Value. Overall this is a very good sign. It means investors as a whole are feeling more confident about the longevity of US companies. And, last week we noticed that even though the market drifted down, Small and Value slipped significantly less, giving boost to this Monday’s explosion.
Have a great weekend!
Indexes are listed in respective order to their reference above: DJ Industrial Average TR USD, S&P 500 TR, DJ US TSM Large Cap Growth TR USD, NASDAQ 100, Technology NTTR TR USD, DJ US Health Care TR USD, DJ US TSM Large Cap Value TR USD, DJ US TSM Mid Cap Growth TR USD, DJ US TSM Mid Cap Value TR USD, DJ US TSM Small Cap Growth TR USD, DJ US TSM Small Cap Value TR USD, FTSE NAREIT All Equity REITs TR, DJ Gbl Ex US Select REIT TR USD, Bloomberg Commodity TR USD, MSCI EAFE NR USD, MSCI EAFE Growth NR USD, MSCI EAFE Value NR USD, MSCI EAFE Small Cap NR USD, MSCI EM NR USD, BBgBarc US Corporate High Yield TR USD, FTSE WGBI NonUSD USD, JPM EMBI Plus TR USD, BBgBarc US Govt 1-3 Yr TR USD, ICE BoafAML 1-3Y US Corp TR USD, BBgBarc Intermediate Treasury TR USD, BBgBarc Interm Corp TR, BBgBarc US Treasury US TIPS TR USD. These materials have been prepared solely for informational purposes based upon data generally available to the public from sources believed to be reliable. All performance references are to benchmark indexes. Performance of specific funds will vary from respective benchmarks. Past performance is not an assurance of future results. Each index cited is provided to illustrate market trends for various asset classes. It is not possible to invest directly in an index. Neither do Indexes reflect individual investor costs, e.g. trading, expense ratios & potential advisory fees.