
Where’s the Next Great Bull Market?
The first chart below plots the relative value of the Mid-Cap 400 Value Index vs. SPX from 2000-October 2002.
This was the bear market coming off the heels of the tech bubble.
As the chart suggests – the SPX was not spared in this period, losing ~50% of its value from 2000-October 2002.
However, at the same time, a budding bull market in mid-cap value stocks was underway, per the relative performance of the Mid-Cap 400 Value Index, which, at one point in the period, was up 40% from its starting value.
And though the index was sold hard like the SPX into the last few months of the 2000-2002 bear, the Mid-Cap Value 400 never lost more than 10% of its starting value through-out the entire process!
Moreover, the relative out-performance of value stocks didn’t end with the October 2002 bear market lows – by the time the next bull market ended in 2007 the SPX merely recouped all its losses from 2000-2002 while the Mid-Cap 400 Value Index rallied 250%.
So, what is to today, as mid-cap value was to 2000-2002, if/when the next bear gets underway?