Some shares maintain up properly throughout corrections, however bear markets ultimately take down every thing. And that’s about the place we’re as we speak. As of this morning, solely 9 shares* representing $1 trillion of market cap are inside 5% of their 52-week excessive. 145 shares representing $9 trillion in market cap are inside 5% of their 52-week low.
Bear markets expertise indiscriminate promoting, however there’s an order to it. Essentially the most speculative names get hit first, then it’s the leaders, after which it’s every thing else. This chart from Coatue by way of Eric Newcomer exhibits how this dynamic performs out, utilizing the bursting of the dotcom bubble because the playbook.
Part I started in mid-2021. Whereas the S&P 500 was hitting new all-time highs, unprofitable tech was getting pummeled. We entered Part II earlier this yr because the tech generals fell one after the other. Microsoft hasn’t been this far beneath its 200-day transferring common since 2012. The uptrend that it’s loved during the last decade is decidedly over.
And now we’re coming into part III. As I discussed, 9 shares within the S&P 500 are inside 5% of their 52-week excessive. Three of them are healthcare, and 6 of them are shopper defensive. Extraordinarily shopper defensive. Kellog, Common Mills, and Molson Coors, to call just a few Persons are consuming cereal and ingesting beer come hell or excessive water. But when this continues, they’ll ultimately get to those too.
The record of shares close to 52-week lows is a who’s who of American enterprise
- Berkshire Hathaway, BlackRock, Invesco, T.Rowe Worth, Financial institution of New York Mellon, State Road, JP Morgan, Goldman Sachs, Morgan Stanley, Charles Schwab, Wells Fargo, Financial institution of America, CitiGroup, KeyCorp, Fith Third Bancorp, U.S. Bancorp, PNC, Residents Monetary, Prudential, Lincoln Nationwide, American Categorical, PayPal
- Fb, Microsoft, Ebay, Salesforce, Service Now, Cisco, Intel, Hewlett Packard, Akamai, F5
- Dow Chemical compounds, DuPont, Altria, Caterpillar, Deere, Common Motors
- Nike, Hilton, Hasbro, Chipotle, Darden
- Disney, Paramount, Information Corp, Fox Corp
- Norfolk Southern, CSX Company
- Boston Properties, Simon Property Group, Digital Realty, Vornado
- 3M, Honeywell, Ingersoll Rand, Illinois Device Works, Dover Company
- Expedia, Reserving, Royal Caribbean, Delta Airways
There aren’t any winners in a bear market. Survival is the secret. A brand new bull market will start ultimately, however proper now, we’re within the “every thing should fall” part.
*I used the S&P 500