A Five Headed Market

Many stock indices have recovered substantially from the lows in March. However, a lot of that is simply due to the largest 5 stocks in the market. (Apple, Microsoft, Amazon, Berkshire Hathaway, and Google)

Here is the average return of the top 5 stocks vs. the Wilshire 5000 return minus those 5 stocks (value-weighted).

While you have seen your returns go up outside those 5 stocks, you can see you are well below your all time high.

The question is how is this gap made up? Do the top 5 stocks fall? Do the bottom thousands of stocks rally? We’ll see what happens.