Winner Take All: Bull Market For Some

On March 23, the stock market bottomed. Down a whopping 30% for the year in one of the most dramatic declines in history. Interesting enough, take a look at the market today and you'd think everything was fine. What happened?

The crash made sense. COVID-19 shook up the economy. Forcing countless industries to shut down, leading to massive job loss, bankruptcies and a whole lot of fear and uncertainty.

What doesn't make sense is the market since then. The pandemic is still in full force but the market has jumped 40%! How are companies doing so well?

In reality, most are not doing well at all. The few that are, are just doing REALLY well.

The top 5 companies in the S&P 500 are Microsoft, Amazon, Apple, Facebook and Google. This group represents 20% of the index and is thriving in this environment. Up anywhere from 10% to 50% for the year, their success has made the market look good...on the surface.

Take a closer look and you'll see that most (smaller, non-tech) stocks have failed to keep up. Most are down at least 20% for the year. Some industries are carrying the brunt of it. Airlines, banks, energy, and auto stocks are down 30%+.

The stock market is dominated by a few extreme winners. This is not uncommon. It's one of the reasons stock picking is so hard, theres's only a few good stocks and you never know who's going to rise to the top.

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Herman Ye

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