2/3 Of Global Stocks Are Down Since 5/21/2015 by Eric Bush, CFA – Gavekal Capital Blog
We are now out over a year since most major equity indexes made a new high. The MSCI World Index, for example, made a new high of 1810 on May 21st, 2015. Today, it sits at about 1677, or 7.3% off the 5/21/2015 high.
Since 5/21/2015, 2 out of 3 mid-large cap stocks have declined. In the first histogram below, we show the number of companies in the GKCI All Country World Index (our version of the MSCI All-Country World Index) that have had positive performance (green) or negative performance (red) since 5/21/2015. As you can see, the return distribution exhibits leptokurtic (high peak) and positive skew (longer right tail) characteristics (the market almost always has a positive skew since positive returns can go to infinity in theory). Overall, 66% of stocks have declined over the past year while just 34% have posted unchanged or positive performance. If we filter out the emerging market stocks, we see that developed market stocks have performed marginally better. 40% of DM stocks have had positive performance over the past year compared to just 23% of EM stocks.