2023 S&P 500 Hindsight

2023 was a complete reversal from 2022 in performance for most long only strategies with the notable geographic exception of China. Hedge funds did their job generally and a good number posted exceptional returns. On a market cap weighted basis, the “magnificent seven” were up 70% for the year – while the remaining stocks generated an 8% total return. The equal weighted S&P 500 underperformed the cap weighted index by an astounding 12.4% (the big got bigger).

• If you bought the top 100 performing stocks in the S&P 500 on an equal weighted basis on Jan 2nd last year and held them through the year, you would have been up 68.6%, and beaten the S&P 500 total return by over 40%.
• If you concentrated and picked the top 10 performing stocks on Jan 2nd, and again held them all year, you would have generated a total return of 150.3%, and demolished the “magnificent seven” by more than 80%.
• 8 of the 11 S&P industry sectors were positive, a huge turnaround from 2022 when 10 of 11 were negative. Last year’s hero, energy, generated the second worst sector returns in 2023.
• If you picked the 100 worst performing stocks for the year, you would have to mark your portfolio down 16.1%.
• If you only owned the worst 10 S&P 500 stocks for the year, you would have finished the year down 39.8%.

In 2023, the growth stock train got back on track, in particular anything to do with artificial intelligence.

2024? Do presidential elections influence the stock market? On the one hand, in the fourth year of a president’s term, the market has been up in 20 of the last 24. On the other, you can’t always count on future returns to match past ones. Despite some consistent patterns, election years are no exception.

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Best wishes to all for a happy, healthy and prosperous 2024!

J. Douglas Newsome, CFA

Managing Director, Director of Research

Perkins Fund Marketing LLC