Beware of Concentrated Performance

| April 15, 2018
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In my latest post I referenced the concentrated nature of the return stream of domestic equities. While it is nice to have exposure to these names, as you can imagine it typically does not end well.

As of the end of February 2018, the five larest companies represent nearly 25% in the Russell 1000 Growth Index.

Historically, when that metric gets above 20%, the largest companies begin to underperform in subsequent periods.

The average one-year return when the top five stocks are over 20% in the Russell 1000 Growth Index is -4.6% with a 68% negative frequency.

The average three-year return when the top five stocks are over 20% in the Russell 1000 Growth Index is -13% with a 78% negative frequency.

Something to consider.


Stay Tuned, Disciplined & Patient! {TJM}

The Investor & Character Equation (ICE) | S + R = O


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