Decile Performance During the Current Bull Market

The average stock that was in the S&P 500 last March 9th is up 122% since then.  To really outperform the average stock since then, however, investors had to be willing to buy the most risky, beaten down names in the index at their lows.  We broke up the S&P 500 into deciles (50 stocks in each decile) based on individual stock performance during the bear market that ran from 10/9/07 to 3/9/09.  The 50 worst performing stocks during the bear are decile 1, the second worst 50 stocks are decile 2, and so on.  We then calculated the average change of stocks in each decile during the current bull market (3/9/09-present) to see how performance during the bear has impacted performance during the bull.  The results are pretty stunning. 

As mentioned above, the average S&P 500 stock is up 122% since 3/9/09.  The 50 stocks that were down the most during the bear are up an average of 371.70% since then!  The next 50 worst performing stocks during the bear are up 184.5%, and the third 50 worst are up 166.83%.  The average performance of each subsequent decile goes down, and the three worst deciles are the only ones that outperformed the average for all stocks.  The 50 stocks that did the best during the bear are only up an average of 30.88%.

It's pretty hard not to have any gains since the market lows last March if you owned stocks.  But to really be beating the market, you had to be willing to buy stocks that a lot of people thought might not even make it through the collapse.