Outperformers During Declines Not Outperforming During Subsequent Recoveries

Includes: ETFC, IVV, SPY, THC
by: Bespoke Investment Group

While it may actually seem like every stock has gone down since the S&P 500 peak on October 9th, some have actually risen. In fact, through Thursday's close, 99 S&P 500 stocks are actually up since the S&P 500 peaked. In the table below, we highlight the best and worst performing stocks in each S&P 500 Industry Group since 10/9/07. While most of the groups highlighted are down since the peak, within most of them there are some pockets of strength. For example, retailers are collectively down over 14%, but in that group GPS has actually risen 5%. On the other hand, there are some groups like Autos and Banks where there is no bright side. In these groups, even the best performing stocks are down.

Some investors believe that watching the stocks that hold up best during market declines give some clues as to who the leaders will be during the recovery. However, when we analyzed the two prior declines during this year, we found that stocks which outperformed on the way down show no significant out/underperformance during the subsequent rally.