While the S&P 500 stock index shows a 12% increase on the year, the largest seven companies of the index have surged over 50%. This phenomenon indicates a narrow market, where a limited number of companies drive the majority of market movements. The question arises: is narrow breadth normal?

This low-breadth environment is on track to be the lowest in more than 50 years. Examining all 500 companies in the S&P 500, only about 28% have outperformed the 12% overall increase this year. Predicting the timing of market shifts remains uncertain. Always has been. Over long periods, however, smaller companies have tended to outperform their larger counterparts.

Averages are important to understand, but history tells us that time spent in the so-called average is short. Markets tend to overshoot the averages. At Vector, we advocate being present in a variety of asset types to position for scenarios known and unknown.

V23159030