By SJS Founder & CEO Scott Savage.
Irrespective of your opinion about wearing a mask, all of us can now better relate with what Batman (aka Bruce Wayne) had to deal with while fighting crime in Gotham City. As we begin the last quarter of a surreal 2020, SJS feels compelled to “unmask” the U.S. stock market’s performance year-to-date, shining a light on how the returns of just five stocks are obscuring how, in our opinion, the average U.S. publicly traded company is doing.
Despite unprecedented market volatility and the resulting decline fueled by panic selling in February and March, the S&P 500 Index has seemingly fully recovered. As of September 30th, the S&P 500 enjoyed a positive return of 5.6% year-to-date. During the same time, the “S&P 495”, that is, the same index with the five largest companies removed had a negative return, -7.7%! These five companies are Apple, Amazon, Microsoft, Facebook, and Alphabet (Google’s parent).
Sources: Yardeni Research and Yahoo Finance, as of 30-Sep-2020.
How did this happen? Well, the S&P 500 and many market indices are “cap-weighted” meaning, the larger the company, the more “weight” it carries in the index. In fact, these five companies made up 25% of the S&P 500 as of September 30th. And these five stocks have gained 47.5% year-to-date through the end of September. That’s right, 47.5%! This remarkable performance so far in 2020 has masked the fact that the average stock is down this year!
Sources: Yahoo Finance, as of 30-Sep-2020.
A similar phenomenon happened in the technology sector during the dot-com era of the late 1990’s. The dot-com bubble burst, and the average investor in an S&P 500 index fund earned no return during the subsequent ten-year period. Some have called this “the lost decade.” And with these five companies trading at a price earnings multiple of 35, we are happy to be more diversified in our investment strategies than these cap-weighted indices.
While we are not predicting a crash in the five companies that have led the U.S. market’s advance so far this year, diversification remains a foundational principle of MarketPlus Investing® and is instrumental in managing future risks and reaping future expected returns. Risks include those we perceive as well as those we cannot yet anticipate. Expected returns will vary across market environments, and the SJS Investment Committee reviews future capital market return expectations in decisions about investment design and asset allocation. Just another way that we work on your behalf to help you unmask the noise of the markets, and to focus on the time-tested strategies that can help you achieve your goals.
Important Disclosure Information and Sources
Past performance does not guarantee future results. Diversification does not eliminate the risk of market loss.
Hyperlinks to third-party information are provided as a convenience and we disclaim any responsibility for information, services or products found on websites or other information linked hereto.
Suggested Reading
One of The Ability Center’s services is the Assistance Dog training program, which helps individuals with disabilities achieve greater independence.
When working with investment managers, we want them to share that same client-first philosophy and sit on the same side of the table with us.
We want to emphasize some best practices that can help us work together to ensure your information and assets remain safe.
The Outlook includes our evolving MarketPlus® Investing philosophy by standing on the shoulders of giants, and ways to help protect your personal information and financial assets. We also highlight The Ability Center and look forward to Q2 2024.
SRDAX is a shining example of the value alternatives can bring to traditional stock and bond strategies.
As we begin the new year, we have some ideas for concrete actions to start your new year on the right foot, financially.
Isn’t this picture magical? It's Main Street in Sylvania, Ohio, the small town where I founded SJS over 28 years ago!
The SJS Q4 2023 Outlook includes our insights on small town values, MarketPlus® Investing, and planning financially for the new year. We also highlight new SJS Team members and look forward to Q1 2024.
To help you financially plan for 2024, we provide this resource with important numbers for the upcoming year.
SJS Investment Services has been recognized in the Forbes / SHOOK 2023 list of America’s Top RIA (Registered Investor Advisor) Firms.
In addition to family gifting, many individuals support giving to organizations that aim to help their communities. We highlight some strategies to make the most of your giving dollars.
You can consider putting excess cash into a money market fund, short-term U.S. Treasury bonds, or a short-term bond mutual fund / ETF.
The future of the housing market is uncertain, and its resilience will be a crucial factor in the broader economic landscape.
The SJS Q3 2023 Outlook includes our insights on gifting and charitable contributions as well as U.S. real estate. We also look forward to Q4 2023.
SJS Investment Services has been recognized in CNBC’s 2023 FA 100 list, an annual ranking of registered investment advisory (RIA) firms within the United States.
International Samaritan is a 501(c)(3) nonprofit organization that is working to break the chains of poverty and improving lives, particularly within garbage dump communities worldwide.
SJS has been recognized in Financial Advisor Magazine’s 2023 Registered Investment Advisor (RIA) Ranking, an annual ranking of independent investment advisory firms within the United States.
The SJS Mission is to empower you to build a better life. That extends to our teammates, clients, and community members.
The SJS Q2 2023 Outlook includes our insights on building up our local communities as well as market performance so far in 2023. We also share even more members of the SJS family and look forward to Q3 2023.
It’s important to recognize how difficult it is to predict what will happen in the short-term for investment markets, and how much margin for error there should be for any prediction.
Leadership Toledo is an organization that connects individuals with the community, engaging and involving them with initiatives that make the Toledo region a great place to live, work, and enjoy.
The SJS Annual Report provides updates on the SJS Team, MarketPlus Investing®, SJS purpose, mission, & values, multi-family office services, and SJS community involvement.
The SJS Q1 2023 Outlook includes our insights on planning for your legacy, tomorrow’s headlines today, how the SECURE 2.0 Act may impact your finances, and looking forward to Q2 2023.
If you are lying awake asking yourself in the quiet of the night, “What should we do with our wealth when we die?”, please read on because in this article you will find potential answers, next steps, and resources.
The market’s reaction to tech in the first quarter is another reminder of how hard it is to time and predict the market, even if you “know” what is going to happen.
In efforts to further improve retirement plan saving and investing, the SECURE 2.0 Act was signed into law in December 2022. We want to highlight how this act may impact your finances.
The SJS word of the year for 2023 is GRATITUDE! Gratitude for our health, families, friends, faith, country, the SJS Team, and most importantly You, our loyal client who trusts us to do what’s in your best interest day-in and day-out.
The mission of Courageous Community Services is to provide meaningful, inclusive opportunities for individuals with disabilities and their families through advocacy, education, and engaging recreational experiences.
The SJS Q4 2022 Outlook includes our insights on the U.S. bond market over the past year, steps to help you plan financially for the new year, a thank you to Bev Langley, and looking forward to Q1 2023.