Random Thoughts

Year to date through December 28, only two of the 11 sectors in the S&P 500 posted YTD total returns advances.

Yet history divines an encouraging implication from these negative returns. Since 1970, the S&P 500 recorded an average annual total return of 11.6% and was up 80% of the time. During these same years, the average difference between the returns for the best and worst sectors was 41 percentage points.

In 2018, the 23.5 point difference between health care’s 5.0% advance and energy’s 18.5% decline was well below that long-term average.

In the year after recording a below-average differential, the S&P 500 posted a positive full-year total return 91% of the time.

Conversely, the 500 was up only 60% of the time when the return dispersion was above average.

So should history repeat, and there’s no guarantee it will, this year’s lump of coal could metamorphize into an unanticipated gem.