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Big disparity in YTD performance among the major indexes
I can’t ever recall this wide a disparity late in a year between the Dow, down only 9.41%, and the NASDAQ, down 31.57%. (Memory might be foggy …Maybe year 2000?)
During severe drawdowns in 2008 and 2000, NASQD and Russell 2000 fell the most, follow by the S&P ~ Dow. As I recall, the interest rate and stock valuation situations are different in every bear market.
This year, Dow sustained the least damage as the value stocks performed better, especially the energy stocks. Going into 2022, the tech stocks were richly valued. Rapid rate hikes put considerable pressure on their earnings and they have hard time meeting the expectation (even through they were guided downward) as the result are reflected in NASDAQ. S&P index has broader exposure to other defensive sectors such as health care, consumer staples and utility that lessen the damage.
If one rebalances out of growth into more value stocks/ funds this year, they should have done better by year end. This is challenging since growth stocks have been so dominant doe a long time.
The best sector has been energy (XLE) and the worst communications (XLC; with 3 of the 4 original FANG stocks, META, GOOG/GOOGL, NFLX). This can be broadly generalized to value/cyclicals outperforming growth, or DJIA outperforming Nasdaq Comp with SP500 in the middle. https://stockcharts.com/h-perf/ui?s=XLE&compare=XLC,$COMPQ,$INDU,$SPX&id=p53415560272
Comments
This year, Dow sustained the least damage as the value stocks performed better, especially the energy stocks. Going into 2022, the tech stocks were richly valued. Rapid rate hikes put considerable pressure on their earnings and they have hard time meeting the expectation (even through they were guided downward) as the result are reflected in NASDAQ. S&P index has broader exposure to other defensive sectors such as health care, consumer staples and utility that lessen the damage.
If one rebalances out of growth into more value stocks/ funds this year, they should have done better by year end. This is challenging since growth stocks have been so dominant doe a long time.
https://stockcharts.com/h-perf/ui?s=XLE&compare=XLC,$COMPQ,$INDU,$SPX&id=p53415560272