The S&P 500 methodology, the industry benchmark which measures the performance for 9 out of 10 asset managers is flawed because it is concentrated, has no anticipation, has been built on hit and trial and has long recovery periods.

S&P 500 Methodology leads to longer recoveries because of the concentration risk. When you give 6 stocks in 500 more than 30% weight, you force the market into long periods of recovery.

Source: AlphaBlock Technologies

A simple average can give us an insight into how long the ongoing correction could last. The current fall from Nov 21, 2022 on SPY is already 207 days old. If we add all the recovery periods from Mar 24, 2022, the recovery could last for 834 days, which means another 627 days to go. We will find out soon, where this recovery period prints. The shortest recovery period was 181 days from Feb 19, 2020, which was backed by state relief, which is hard to come by now.

AlphaBlock Team