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Columbus Day Thoughts

It’s Columbus Day and we are closed but I saw the article below in Bloomberg and thought it was a nice supplement to my post last week.

It does a
Nice job showing the extent of the correction and how it’s masked by the capitalization weighted S & P 500 Index:

THE CORRECTION IS ALREADY HERE – Bloomberg: “For most American stocks, the correction has arrived. While gauges such as the Standard & Poor’s 500 Index cling to gains for the year, declines that exceed 10 percent are spreading in the broader market. In the Russell 3000 Index, for example, 79 percent of companies are down that much from their highs … Concern the rate of global growth is slowing and the Federal Reserve is preparing to raise interest rates has pushed the S&P 500 down 5.2 percent from its September record.

“The 1,700-stock Value Line Arithmetic index, which strips out weightings related to market value to show how the average U.S. stock has fared, is down 10 percent since July. Three weeks of declines have broken the almost unprecedented calm that had enveloped markets for most of 2014. Eight trading days into October, the S&P 500 has posted six single-day moves exceeding 1 percent. The market went without any swings of that size for 62 days in May, June and July, the longest stretch since 1995. At the same time, the 5.2 percent decline that started in September is only slightly bigger than the last two retreats that exceeded 3 percent, in April and August. Both gave way to larger advances. At about 15 times forecast earnings, the S&P 500’s valuation has climbed 40 percent from the bottom in 2011, data compiled by Bloomberg show.” http://bloom.bg/1D5T1YS