Take a look at the price return of the S&P 500 Index and the median-performing stock on the index. The strongest-performing stocks have lifted the index performance (green dots) this year, masking more muted returns from the median stock (blue bars). Yet this year’s narrower market leadership is far from extreme. The median stock has delivered positive returns year-to-date, supported by strong earnings–suggesting a resilient market. Contrast this with the extreme disparity between the haves and have-nots in the U.S. market in 1999, before the collapse of the dot-com bubble: The price return of the median stock lagged the index by 21% and earnings-per-share (EPS) growth trailed by 19 percentage points.
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Richard Turnill, BlackRock Global Chief Investment Strategist, thinks that today’s relatively concentrated equity market leadership isn’t as worrisome as many perceive.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch