Trash is King

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Since the recent stock market rally began on March 9th, the S&P 500 is up 28%. Interestingly, the market sectors that were beaten down the most since the crash that began on October 9th, 2007, are the sectors that have performed the best during the current surge. Financial stocks, down about 70% during the market pullback, are now up 76% from their market lows. Industrials, which dropped 50% during the decline, are now up about 45% since the recovery.

It had been widely believed that the best place to be whenever stocks recovered would be high-quality companies with the resources to tough out an extended difficult economic environment. Instead, companies with high levels of debts and poor rates of return on equity have comeback the strongest.

It’s not uncommon for the sectors that were hit hardest during the market collapse to lead the comeback. The same happened in 2003. However, some believe the rebound is going to have to quickly transition to high-quality stocks in order to be sustainable. The more optimistic view is that despite the lopsided nature of the recent rally, the rebound has been broad-based and that most stocks, regardless of sector or quality, have been participating.

About the author

Lon Jefferies, CFP®, MBA

Lon Jefferies is an investment advisor representative with Net Worth Advisory Group, a fee-only financial planning firm in Salt Lake City, Utah. He is a Certified Financial Planner (CFP®) and a member of the National Association of Personal Financial Advisors (NAPFA). He possesses an MBA and bachelor's degrees in Finance and Marketing from the University of Utah. Lon writes articles for local magazines such as Utah CEO, Business Connect and Utah Business Magazine, and he consistently contributes articles to online magazines such as and (by The Wall Street Journal). Additionally, Lon is an expert author at Lon has been quoted nationally in publications such as the NY Times and Investment News.

Lon can be contacted at (801) 566-0740 or Learn more about Net Worth Advisory Group at and visit Lon's blog at

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