Articles by Greg Swenson, CFA Director of Equities

The Leuthold Core and Global portfolios both performed well in December as markets surged into year-end. Global performed particularly well on a relative basis as the equities had an outstanding month.

Growth has been outperforming Value since 2007, but the magnitude varies widely by market cap.  Large Cap has seen Growth outperform Value by a greater amount and with more consistency than has the Small Cap space. We use the S&P style indexes for reference.

Financials, Energy, and Information Technology remain at the top of our sector scores. Materials advanced up to 5th from 8th. Consumer Discretionary made the largest drop as it moved from 4th down to 8th. Communication Services joins Industrials and Utilities to round out the bottom three worst-rated sectors.

AdvantHedge was up 6.9% in November, ahead of the inverse S&P 500 (+0.7%) and the inverse Russell 2000 (+4.2%). Expensive, unprofitable stocks sold off aggressively this month, reversing the appetite for speculative stocks that had endured throughout most of 2020, but has stalled out in 2021.

The Leuthold Core and Global portfolios had slightly negative results in November, holding up well considering the damage done to mid-cap, small-cap, and equal-weight indexes.

Three groups bumped up to Attractive this month, Insurance Brokers, Thrifts & Mortgage Finance, and Oil & Gas Exploration & Production.

After years of languishing in the rock bottom of Group Selection Scores and sector rankings, Energy exploded higher this month, jumping from 10th lowest (out of eleven broad sectors) to 3rd highest in our composite rankings.

AdvantHedge was down 5.9% in October, ahead of the inverse S&P 500 (-7.0%), but trailing the inverse Russell 2000 (-4.3%).

The Leuthold Core and Global portfolios were higher in October, but trailed their all-equity benchmarks as mega-cap growth leadership hurt relative performance in the equity sleeves.  

Financials, Information Technology, Health Care, and Consumer Discretionary occupy 19 of the 24 seats in the Attractive range at present. Cyclical groups have ranked well since last fall and continue to do so, while Growth-oriented themes have also recently made a comeback—with Health Care returning to the top five of our sector ranks back in August. 

Industries propelling performance have been diverse; the top-five groups are from five different sectors. Commodity-oriented, retail, and financial groups have been the primary drivers. The Leuthold Select Industries equity strategy, which chooses its thematic investments from the GS Score’s Attractive range, is up 20.2% YTD through September.

Short positions did well as expensive stocks underperformed amid rising rates and market volatility.

The Leuthold Core and Global portfolios both held up better during the September selloff than their all-equity benchmarks.

The recent bout of market turbulence has taken a little shine off of the two most famous meme stocks. Still, the elevated levels at which both AMC and GameStop trade can be described as nothing short of spectacular.

Financials have dramatically improved their Growth profile; a move that makes the traditionally value-oriented sector one of the most well-rounded segments of the equity market.

Financials, Information Technology, and Consumer Discretionary remain at the top of our sector scores. Health Care advanced up to 4th from 6th. Communication Services and Materials both dropped one spot moving to 5th and 6th, respectively. Real Estate, Energy, and Utilities are the three-worst rated, which has been the case for over a year.

AdvantHedge was down 1.3% in August, ahead of the inverse S&P 500 (-3.0%), and the inverse Russell 2000 (-2.2%). Sector performance lacked any clear style drivers as Financials, Communication Services, and Utilities were the top-three S&P 500 sectors.

The Leuthold Core and Global portfolios both posted positive performance in August. Strong results from AdvantHedge (equity hedge) was a boost to return.

Financials and Consumer Discretionary remain at the top of our sector rankings. Materials dropped out of the top three to 5th, along with Industrials moving from 4th to 7th. Information Technology and Communication Services moved in tandem to the 3rd and 4th spots, from 5th and 6th, respectively. Energy, Real Estate, and Utilities are the three-worst rated, which has been the case for over a year.

In 2020, speculative Growth was easily the best-performing portion of the market. However, in 2021, that has reversed: Growth companies with negative earnings are underperforming everything else.