Published Wednesday, January 13, 2021 at: 9:10 PM EST
Facebook, Apple, Amazon, Netflix, Google, and Microsoft – the six FAANGM stocks -- were the runaway leaders of the new bull market that began after stocks bottomed on March 23rd, but now the rally has broadened to the other 494 companies in the Standard & Poor’s 500. It’s good news.
The S&P 500 is a capitalization-weighted index, which makes the companies with the largest market capitalization more influential in the price of the index of the 500 largest publicly-held U.S. companies.
Over the 12 months ended Jan. 4, the widely-quoted S&P 500 index significantly outperformed the index of the 500 companies equally-weighted. Since the election, that’s changed. The equal-weighted index of the S&P 500 has outperformed the market-cap-weighted index.
The S&P 500 is a measure not just of stock prices; it’s a measure of the strength of the nation. The recent trend in which the other 494 companies in the S&P 500 are catching up to the FAANGM is good news. It indicates investor confidence in the broad economy following the leadership of the FAANGM. After a year of the pandemic, it is a sign of investor confidence in a return to normalcy. It shows the bull market is not petering out. Rather, a new leg of the bull run could be in the offing.
The broadening of the bull market has meant that large growth stocks like the FAANGM, which have dominated the Covid-19 bull market surge, have stopped outperforming value-stocks and small-capitalization company shares.
Now is a good time to check that your portfolio is properly diversified in accordance with your risk tolerance, and optimized to help you achieve your long-term investment goals.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. It does not take into account your investment objectives, financial or tax situation, or particular needs. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences.
The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions.
Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. The material represents an assessment of financial, economic and tax law at a specific point in time and is not a guarantee of future results.
This article was written by a professional financial journalist for Advisor Products and is not intended as legal or investment advice.
Retail sales dropped sharply in December and business-owner optimism plunged but events in the Washington, D.C. overshadowed everything. Yet share prices of America’s blue-chip stocks did not drop very much
Interest rates are important to investors and they are currently at or near all-time lows. At this past June’s Federal Reserve meeting, interest rates were kept at a range of 0%-0.25% and it was indicated that they will remain ne...
Securities and Advisory Services offered through FSC Securities Corporation, Member FINRA/SIPC. Additional advisory services offered through Zephyr Investment Management, a registered investment advisor in the state of California, not affiliated with FSC Securities Corporation.
This communication is strictly intended for individuals residing in the states of AZ, CA, CO, CT, DC, FL, HI, ID, IN, MA, NC, NM, NV, NY, PA, OR, UT, and WA. No offers may be made or accepted from any resident outside the specific states referenced.
IMPORTANT CONSUMER INFORMATION
A Broker/dealer, investment adviser, BD agent, or IA rep may only transact business in a state if first registered, or is excluded or exempt from state broker/dealer, investment adviser, BD agent, or IA registration requirements as appropriate. Follow-up, individualized responses to persons in a state by such a firm or individual that involve either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, will not be made without first complying with appropriate registration requirements, or an applicable exemption or exclusion. For information concerning the licensing status or disciplinary history of a broker/dealer, investment, adviser, BD agent, or IA rep, a consumer should contact his or her state securities law administrator. Information is also available at www.adviserinfo.sec.gov and brokercheck.finra.org.