In the below table we show the yearly price change of the MSCI World Index since 2007. We then show how much of the performance was attributable to the top 100 contributors for that year and how much was attributable to the rest of the index (the bottom 1500 or so companies, depending on the year). In the rightmost column we show the percent of companies that contributed positively in each year (i.e. the percent of companies that had positive performance). A few observations to take note of are as follows:
- Since 2007 there have only been three years in which the contribution of the top 100 contributors was positive while the cumulative contribution from the rest of the World Index was negative (2007, 2011, and 2014)
- 2007 marked the top of the last bull market while 2011 suffered a nearly 20% correction
- So far in 2014 only 54% of companies have posted positive nominal performance
- In each year that the World Index posted a strong advance (2009, 2010, 2012, 2013) greater than 70% of companies posted positive performance
- In each year that the World Index displayed significant market weakness (2007, 2008, 2011) the number of companies with positive performance was 52.5% or less
In sum, so far this year we have the MSCI World Index up about 2.5%. The top 100 contributors have contributed 4% of that total while the bottom 1515 contributors have contributed -1.4%. Moreover, only 54% of stocks have even gained this year, which is the lowest number since 2011, a year in which the stock market fell by nearly 20% at its trough. These data points are a mirror image of observations in years of strong market advances (2009, 2010, 2012, 2013) and suggest a significant amount of weakness under the surface of headline index prices.