The S&P 500 is only down about 10% from its all-time high. Yet it feels like the market is down a lot more than that.
That’s because a handful of expensive, high-flying tech stocks are supporting the index. And even then, we’re still only talking about the heavy hitters. The average stock is already well into bear market territory.
Bespoke Investment Group ran the numbers and found that the average large-cap stock is down 22.5%. For small- and mid-cap stocks, it gets a lot worse. Mid-caps are down 26.5% and small-caps are actually down more than 30%. That’s not just your garden variety correction. That’s a deep bear market.
Looking at individual sectors, it doesn’t get any better. Across all market caps, there is not a single sector close to its 52-week high. Energy stocks are down a staggering 52%, followed by materials at 34%. The best – or should I say “least bad” – sector, utilities, is down by 14%. Not quite bear market territory, but close enough.
So, is this it? Is the great bull market that started in 2009 officially over? Or is this just a much-needed pause before the next leg up?
We won’t know for sure until after the fact, but for now there appears to be no end in sight. 2015 was a rocky, trendless market, and 2016 has gotten off to a brutal start. But rather than wring our hands and cry about it, let’s sit down and make a bear market action list:
Bear markets aren’t fun. But they can be profitable. If you want to try your luck shorting stocks, and actually make money while the market falls, you should read my friend John Del Vecchio’s Forensic Investor. He’s armed, and ready, to make money while this thing falls.