Why are portfolio managers beating the market this year when they failed so miserably at it last year? The reason can be found when looking at the various stock characteristics that are leading and lagging the major averages. The market has performed very well over the last month or so after experiencing a minor pullback from the March 2nd all-time closing high for the S&P 500. While the S&P has yet to take out its March 2nd highs (meaning the bull market has still not officially turned 6 years old yet), the average stock in the index is up 4.01% since the close on March 11th. The index (cap-weighted) itself is up just 3.4% over this same time period, so smaller cap stocks in the index have done better than larger cap stocks.
What other stock characteristics have driven performance during this rally over the last month or so? To find out we ran our decile analysis of the index since March 11th. To run the analysis, we break the index (500 stocks) into deciles (10 groups with 50 stocks each) based on various stock characteristics like valuation, dividend yield, short interest, revenue exposure, analyst ratings, institutional ownership, etc. We then calculate the average performance of the stocks in each decile since the close on March 11th. This analysis really allows you to see which areas of the market have led and which areas have lagged over certain time periods.
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