Thank You Sir May I Have Another
According to Brian Swint from Barron’s, in the first quarter of 2024, the S&P 500 had its best first three months since 2019, gaining more than 10%. Since 1961, the market has gained at least 9% in the first quarter 13 times. It went on to rise again in the second quarter nine of those times and finished the year higher in every instance but one. With the S&P 500 up over 20% in 2023, a fair question to ask is will it happen again? Back to back returns of over 20% are rare. Except for the period from 1995 to 1999, it only happened 2 other times since 1928 according to macrotrends.net.
Party Like it’s 2029
In the mid to late 1990s the S&P 500 experienced an unprecedented 5 consecutive years of market gains, with 4 out of 5 years returning over 20%. 1999 trailed the other 4 years with a respectable 19.53% return. Is this the new 1990’s? It’s hard to say since the rally in 2023 was driven by 7 stocks that grew double and triple digits. Now they make up 29% of the S&P 500 “Enter The Magnificent 7”. According to David Thomas of Forbes these 7 stocks “grew to the largest concentration the S&P 500 has ever had”. If you removed these 7 stocks, the 2023 return would be 8% instead of 26% according to Mr. Thomas. 8% is still good and certainly within the range of historical returns. Will the 2020s be like the 1990s? It may be premature to party like it’s 1999 (kids ask your parents about the artist formally known as “Prince”)
The Fab Four (You May Want to Ask Your Grandparents…)
I want to hold your hand, or maybe the 4 stocks left from the magnificent 7. “The Magnificent Seven trade is beginning to fizzle—and yet, the stock market is still heading higher,” says the Wall Street Journal in the April 1st edition. The S&P 500 climbed 10% in the first quarter led by the newly dubbed Fab Four. The Fab Four are responsible for nearly half of the S&P 500’s first-quarter advance, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. It is good to see the market still rally without stocks like Apple and Tesla. The former members of the Magnificent 7 were both down double digits in the first quarter. This means other groups are taking part in the rally. In fact, all of the S&P 500’s sectors, except real estate, logged gains in the first quarter.
Most notably, I have learned how to use National Lampoon’s Animal House, Prince, and the Beatles in the same article. Very impressive!
Disclosure
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Investing involves risk including loss of principal. No strategy assures success or protects against loss. Please visit our website www.planipg.com for more information and useful tools.
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