A Wealth of Common Sense: 1999 Vs. 2024
The stock market is up over 20% year-to-date. That’s well in excess of its average annual return closer to 10%. Adding in last year’s rally, the market is up nearly 30% over the past 12 months.
Plus, out of the 2,700 stocks in the Russell 3000, 101 of them are up 100% or more so far this year. Thirteen stocks are up more than 300%, beating the market average by more than tenfold.
However, a full 1,000 stocks in that index are down. That’s about 40% of the index. And 137 stocks have lost 50% of their value or more this year.
Overall, this points to the trend over the past few years of some big gains boosting returns. Many individual stocks continue to struggle. In the S&P 500 index, it’s even more concentrated, with just five stocks responsible for half the index’s gains.
This trend is similar to 1999, a strong year for the market, up 24%. Much like this year, a handful of stocks, dominated in the tech sector, have driven the returns. A full 13 stocks finished that year with 1,000% gains.
But more than 1,000 stocks in the Russell 3000 index were down that year. Of those, 182 lost 50% or more.
What that doesn’t suggest that we’re near a market peak anytime soon, it’s a warning sign. Investors who have had big winners this year may want to take some profits off the table now.