December 21, 2023
By Peter Bower
Thank you, Santa, for the year-end rally! Historically, the fourth quarter has been a strong one. The Bull and his partners are happy that this one played out true to the pattern. It started in November, a little later than usual, but came on with gusto.
This rally was a change from the previous 10 months. Then performance was focused on a few very large growth companies, the “Magnificent Seven.” Investors bet that these firms would continue to do well in a challenging environment, perhaps even a recession. Finally, at the beginning of November, investors became more convinced that a recession was not going to happen. Therefore, there were some really good values among the 493 stocks in the S&P 500 index beyond the anointed seven.
During the past two months, the S&P 500 equal-weighted index outperformed the regular market-weighted index by around 2 percent. Market weighting gives a greater percentage of the index to the large companies, giving them more influence over the return measure. The fact that the equal-weighted index did better proves that market performance started coming from many other stocks. The Bull and his partners expect this to continue. This will make for a much broader and healthier stock market. We are keeping our fingers crossed; stay steady my friends.
The Lonely Bull
