Thread by @sonusvarghese

On the topic of the stock market vs the real economy, there's lot of information once you disaggregate the "stock market", as @NathanTankus pointed out.

Here's avg YTD returns for S&P 500 companies disaggregated by sales growth

Sales >20% y/y: +23% ytd
Sales <-20% y/y: -24%

1/

Another simple disaggregation is by market cap.

Again, a wide dispersion, which wasn't the case back in February.

Avg. YTD returns for Market Cap > $200 Bil
As of 2/19: +8%
As of 8/21: +19%

Avg. YTD returns for Market Cap < $25 Bil
As of 2/19: +0.5%
As of 8/21: -14%

2/

Here's the distribution of YTD returns of S&P 500 companies, as of 8/21/20 compared to 2/19/20.

Percent of companies with YTD returns < -25% -
As of 2/19: 0%
As of 8/21: 25%

Percent of companies with YTD returns > 10% -
As of 2/19: 2%
As of 8/21: 13%

3/

Here's sector/stock (FAAMG) performance attribution I posted last week after the S&P 500 hit a new high.

In a sense, "stocks" have been very reflective of the COVID economy, but you have to look underneath.

Though as @TheStalwart noted, they may still be over-valued.

4/

Ironically, this probably makes it a "stock-pickers" market.

And it's not just Tech/Health Care outperforming.

The housing market has been on a tear & homebuilder performance has reflected that.

XHB: +18.8% ytd (as of 8/21/20)
Pulte: 23.2%
DR Horton: 47.3%
Lennar: 43.2%

/End