Webster's definition for the verb form of "thin" is to become less dense, crowded, or numerous. Thin, thinner, thinning. Market leadership has certainly thinned in recent months and is now quite thin indeed. As of about a month ago Goldman Sachs put out this list of just 10 stocks having contributed 122% of the S&P 500 year-to-date return meaning that the ENTIRE other 490 stocks suffered losses in the aggregate:
The S&P 500 Index returned 1.8% for the first half of 2018. If you remove the famous FAANG stocks (Facebook, Apple, Amazon, Netflix, and Google) plus Microsoft, then the return would have fallen to -0.73%. This means that increasingly, recent stock market gains have been generated by price gains in the gargantuan tech stocks. These stocks have come to dominate the US stock market averages. Just five of these huge companies (throw out Netflix for now) have a combined market capitalization of over $4 trillion dollars. This sum is equal to the entire combined market value of the smallest 282 companies in the S&P 500!
(Additional investment specific commentary follows for client subscribers)
SVANE CAPITAL, LLC IS A REGISTERED INVESTMENT ADVISOR. INFORMATION PRESENTED IS FOR INFORMATIONAL AND EDUCATIONAL PURPOSES ONLY AND DOES NOT INTEND TO MAKE AN OFFER OR SOLICITATION FOR THE SALE OR PURCHASE OF ANY SPECIFIC SECURITIES, INVESTMENTS, OR INVESTMENT STRATEGIES. INVESTMENTS INVOLVE RISK AND UNLESS OTHERWISE STATED, ARE NOT GUARANTEED. INTERNATIONAL INVESTING INVOLVES SPECIAL RISKS INCLUDING THE POSSIBILITY OF SUBSTANTIAL VOLATILITY DUE TO CURRENCY FLUCTUATIONS AND POLITICAL UNCERTAINTIES. AN INVESTMENT CONCENTRATED IN SECTORS AND INDUSTRIES MAY INVOLVE GREATER RISK THAN A MORE DIVERSIFIED INVESTMENT. THERE IS NO ASSURANCE THAT A DIVERSIFIED PORTFOLIO WILL PRODUCE BETTER RETURNS THAN AN UNDIVERSIFIED PORTFOLIO, NOR DOES DIVERSIFICATION ASSURE AGAINST MARKET LOSS. ANY GRAPH PRESENTED CANNOT IN AND OF ITSELF BE USED AS THE SOLE DETERMINANT IN MAKING AN INVESTMENT DECISION. GRAPHS ARE HISTORICAL DEPICTIONS AND HAVE INHERENT LIMITATIONS IN MAKING INVESTMENT DECISIONS AND CANNOT PREDICT THE FUTURE RESULTS OF ANY INVESTMENT. PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE PERFORMANCE. BE SURE TO FIRST CONSULT WITH A QUALIFIED FINANCIAL ADVISER AND/OR TAX PROFESSIONAL BEFORE IMPLEMENTING ANY STRATEGY DISCUSSED HEREIN.