Editor's Note: Below is an excerpt from today's Early Look written by Hedgeye CEO Keith McCullough. Click here to learn more about the Early Look.
Another way to think about winning in this game is not to be riding losers. In US Equity Style Factor terms, last week’s losers were the ones you should have been avoiding all year long:
- Sector Risk = Energy Stocks (XLE) down another -2.5% on the week to -17.3% YTD
- Quality (High Short Interest) = down another -2.0% on the week to -4.3% YTD
- Size (Bottom 25% of SP500 market cap) = down another -1.9% on the week to -1.0% YTD
- Growth (Bottom 25% of SP500 EPS growth rates) = down another -1.4% on the week to -0.2% YTD
*Mean performance of Top Quartile vs. Bottom Quartile for SP500 companies
Put simply, if you’re long, smaller, low-quality companies who have been levered to either Reflation’s Rollover or their own organic growth problems… that’s been a big problem.