Saga of Financial Markets


Last updateSat, 29 Jul 2017 12am

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Nifty Nine is driving US Markets

The return generated by US bonds and equities were flat for 2015.  It is the 2nd worst collective 12 months since 1995 - outstripped only by the disaster year of 2008.  On the other hand, "Nifity Nine" - Facebook, Amazon, Netflix, Google, Microsoft, Salesforce, eBay, Starbucks and Priceline beat the rest of the US market by more than 60%!

In other words, Had it not been for a small group of nifty companies, 2015 would have entered the history books as a terrible year for the US stock market.

Looking back, there were 2 period of similar market characteristics - dominance by a few big companies - or a "narrowing" market - a symptom of the end of a bull run:

  1. In the late 1960s and early 1970s - when a long bull market petered out into a period dominated by a "Nifty Fifity" of companies such as Xerox.  The market peaked in the late 1960s but the Nifties carried on until 1972.
  2. The late 1990s, where the market was dominated by the dot-coms.

The chart below illustrates the performance of Nifty Nine vs S&P 500.

The chart illustrates the biggest 50 companies rose last year, but the Russell 2000 of smaller companies fell, showing concerns about the economy, while and equal-weighted version of the S&P also fell.


Financial Times, John Authers, 2016-01-03, "Equities: And then there were nine"