Soldiers vs. Generals – a repeat of the tech bubble?

So far this year, a handful of mega-cap stocks have far outpaced the returns of the average stock.

In fact, as of June 14, 2024, the average stock price of the Russell 3000 index and its value and growth constituents was in the red year-over-year.

This trend continued into last week, with the average constituent of the Russell 3000 Index falling 1.26% last week, the New York Composite Index falling 0.86%, the S&P 500 Equal Weight Index falling 0.52%, and the Dow Jones Industrial Average falling 0.51%.

So it wasn’t a great week for the stock market, despite the financial press claiming that it had had five good days.

Of course, the Nvidia Express continued to gallop through the week ending June 14, 2024, but just four “generals” were responsible for the entirety of the Russell 3000 Index’s gains, and even more, as the “soldiers” retreated.

The value was right there

Opinions vary as to what this huge divergence means for stock prices going forward, but students of market history might consider what happened after the tech bubble burst in 2000.

Despite enduring huge volatility along the way, not to mention the dire situations of 2002, 2008, and 2011, value strategies performed admirably, with the S&P 500 Pure Value Index winning handily after the tech bubble burst in March 2000.

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