The average stock in the S&P 500 gained nearly 4% in the third quarter of 2016, but we found an interesting performance divergence based on performance in the first half of the year. Below we’ve broken the S&P 500 into deciles (10 groups of 50 stocks each) based on first half performance. The 50 stocks that did the best in the first half are in decile 1 (marked “Best” in the chart), while the 50 stocks that did the worst in the first half are in decile 10 (marked “Worst” in the chart). As shown, the top two deciles of the best performing stocks in the first half of 2016 both averaged declines in the third quarter. At the same time, the 50 stocks that did the worst in the first half gained an average of 11.8% in the third quarter. Judging by this data, investors clearly rotated out of winners in the first half and into the losers.
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