Losers Become Big Winners

The average stock in the S&P 500 is now up a whopping 20.94% since the close on October 3rd.  But the stocks that got hit the hardest during the summer correction are up much more than that.  We broke the S&P 500 into deciles (10 groups of 50 stocks each) based on stock performance from July 7th (the day before the big summer selloff started) through October 3rd (the recent low), and then we calculated the average performance of the stocks in each decile since October 3rd.  As shown below, the 50 stocks that were down the most from July 7th through October 3rd are up an average of 35.3% since then!  Conversely, the 50 stocks that held up the best during the summer correction are only up an average of 6.9% during the current rally, which is severe underperformance.

 

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