Whatever one’s preferred leftovers from yesterday’s feast, the odds are good you’ll find them more appetizing than the slop served up by global asset markets this year. Stocks have obviously been turkeys, but all the surrounding trimmings that help diversify a portfolio have proven anything but complementary to the main course.
Portfolio managers who tilt toward Value or Growth stocks have long known that each style carries with it an inherent bias toward some sectors and away from others. Our recent piece, Value Style’s 100-Year Flood, highlighted the significant role that sector weights (overweight Financials and Energy, underweight Technology) played in Value’s decade-long stretch of underperformance.
Each January, this publication has presented a look back at the prior year’s best and worst industry groups and institutional stocks.
A few months ago John Lillard, President of JMB Institutional Realty, had a great idea for us. One of John's suggestions was that we compile histograms of past stock market performance to help put the recent outstanding stock market performance in better perspective. Yes, some of our best ideas come from clients.