But this has been an odd rally.
In a world roiled with concerns about Europe and the global economy, the best performing sectors in the market this year have been low quality, mostly non-dividend paying stocks.
Based on Merrill Lynch Quality indices, here's a breakdown of price-only performance so far this year:
- C&D rated stocks: +18.9%
- B- rated stocks: +9.3%
- S&P 500: +8.3%
- A- rated stocks: +7.5%
- A+ rated stocks: +7.2%
- A rated stocks: +5.9%
- B+ rated stocks: +4.9%
- B rated stocks: +4.5%
A couple of other factoids from the first half of this year:
- Sector outperformance was concentrated in three sectors: finance; technology; and telecom services. Big losers were mostly concentrated in the energy and materials sectors;
- While you might think that investors would be most interested in stocks that offered dividends, that has not been the case so far this year. Non-dividend paying stocks have outperformed the S&P 500 by a whopping 8.98% so far in 2012, while the sectors that paid investors a dividend have lagged the broader market.