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

 

Disclosure
Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Meyer Capital Group), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Meyer Capital Group. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Meyer Capital Group is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Meyer Capital Group’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

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