Investors Paying Insufficient Attention to Market Negatives

The first quarter saw volatility return to the United States equity market. At long last, the indexes had their first 10% decline since 2016 and the VIX index of volatility soared to 50 before settling back to around 20. The VIX had been mostly at 10 for the past year. Stock pickers found themselves in an environment where they could demonstrate their ability to add value, but the market remained narrow, with, according to Bianco Research, the ten largest capitalization companies in the Standard & Poor's 500 accounting for 45% of the year-to-date performance of the index. Technology stocks were at the top of the pack, with Amazon, the standout, contributing 16.5 percentage points, followed by Microsoft at 9.3, Google at 6.6 and Apple at 6.3. These companies are indeed impressive, but you have to wonder if their stock market leadership can continue indefinitely.