Superheroes, Parachutes, Eggs, And Balls

Superheroes, Parachutes, Eggs, And Balls
Paul Allison, CFA

10 months ago1 min

This chart, put together by RW Baird, looks at a number of US stocks (Bloomberg tickers displayed) and their relative performance during 2022’s bear market and partial recovery, plotting each into one of four cleverly named quadrants. In the top left are firms that fell by more than the S&P 500 (i.e. more than 25%) but were bouncier (i.e. rallied more than 15%) during the recovery – they’re called “balls”. In the bottom left are those that fell by more than the market and rose by less during the recovery – “eggs”. Bottom right are the “parachutes”, stocks that fell by less but also rose by less, and in the top right are the “superheroes”, who fell by less but then rallied by more.

Now, how you interpret this past performance is up to you. If you’re looking for a sprinkling of defensiveness in your portfolio, you could fish in the “parachutes” pool. Mind you, if you’ve already been uber-cautious over the past 12 months and want a bit more zing in your fund, then the “balls” could be for you. But, if like most people you’re unsure which direction the market might be headed in, there could be some appealing, “all-weather” investment ideas lurking in that top-right superhero lair.



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Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

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