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B400 Shows Its Stuff As Market Rebounds from Correction

John A. PrestboJohn A. Prestbo

Now that the rally seems to have taken a breather, it’s a good point to see how the Barron’s 400 fared during the recent correction and rebound.

The short answer is, very well! The long answer can be seen in this chart:

Barron's 400 index vs DJUSTMI

From May 31 through June 11 the Barron’s 400 slightly trailed the Dow Jones U.S. Total Market Index, a broad benchmark that includes all exchange-listed stocks. Then, through the correction low on June 24, the Barron’s 400 maintained a small lead but closely followed the broad market.

That relationship continued as the rebound began, but the Barron’s 400 began picking up steam from June 27 onward. It outpaced the broad market by more than a full percentage point during the recovery and also for the May 31-July 15 period.

Here is a tabular summary:

5/31–7/15 4.69% 3.49%
5/31–6/18 1.54% 1.23%
6/18–6/24 -4.99% -4.83%
6/24–7/15 8.51% 7.42%

It’s okay for a growth index to lose a little more than the broad market during a correction—if it more than makes up for that underperformance when the market bounces back.

John Prestbo, senior advisor to MarketGrader Capital, was formerly editor and executive director of Dow Jones Indexes. He was also chairman of the Dow Jones Index Oversight Committee. During his time at Dow Jones Indexes he worked, along with Barron's and MarketGrader, on the development of the Barron's 400 Index. Prior to that, Mr. Prestbo worked as an editor and writer for The Wall Street Journal in various capacities, including page-one editor, commodity news editor and markets editor. Mr. Prestbo has co-authored or edited several books over the past 30 years. The most recent was "The Market's Measure: An Illustrated History of America Told Through the Dow Jones Industrial Average," published by Dow Jones Indexes in 1999 and "Barron's Guide to Making Investment Decisions" which he helped to compile and edit in 2006. Mr. Prestbo won the University of Missouri Award for Distinguished Business Writing in 1967 and the George M. Loeb Achievement Award for Business Writing in 1968. In 2007, he won the William F. Sharpe Indexing Lifetime Achievement Award. That same year, he was honored for his leadership by Dow Jones Indexes during its celebration of 10 years as a separate business unit.

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