The 21% year-to-date drop in both the S&P 500 and Russell 1000 indexes, while quite a story in its own right, does not tell the whole tale. In the past six months, growth has suffered the bulk of the damage, and while value is not unscathed, the performance differences are wide enough to drive a truck through.
Within large-caps, the Russell 1000 Growth Index is down 28.07% year to date while Russell 1000 Value is off 12.86%, a spread of 1,521 basis points. In the small-cap realm, the Russell 2000 is down 23.43%. But looking closer, the Russell 2000 Growth is down 29.45% while Russell 2000 Value has fallen 17.31%, a difference of 1,214 basis points. As for microcaps, the Russell Microcap Index is down 25.11%, with Growth down 33.04% and Value down 19.71%, a spread of 1,333 basis points.
Large-Caps - Russell 1000: (-20.94%)
Russell 1000 Growth (-28.07%)
Russell 1000 Value (-12.86%)
Small-Caps - Russell 2000 (-23.43%)
Russell 2000 Growth (-29.45%)
Russell 2000 Value (-17.31%)
Microcaps - Russell Microcap Index (-25.11%)
Russell Micro Growth (-33.04%)
Russell Micro Value (-19.71%)
Obviously, it has not been a good start to 2022, no matter how you slice it. It's natural to want to compare the current period to other tumultuous times; while the circumstances that surround a particular market pullback are always different, it may give some perspective.
The Pandemic: During the first half of 2020, it was value that suffered the most; large-caps actually held up fairly well.
Large-Caps - Russell 1000: (-2.81%)
Russell 1000 Growth (+9.81%)
Russell 1000 Value (-16.26%)
Small-Caps - Russell 2000 (-12.98%)
Russell 2000 Growth (-3.06%)
Russell 2000 Value (-23.5%)
Microcaps - Russell Microcap Index (-11.21%)
Russell Micro Growth (+1.92%)
Russell Micro Value (-21.44%)
Contained within the first half of 2020 was a steep drawdown between late February and late March. Markets recovered from that point, though, and the Russell 1000 (+20.96%), Russell 2000 (+19.96%) and Russell Micro (+20.96%) all ended with strong years. However, growth was the big winner in 2020 and value performed poorly:
Russell 1000 Growth (+38.49%)
Russell 1000 Value (+2.8%)
Russell 2000 Growth (+34.63%)
Russell 2000 Value (+4.63%)
Russell Micro Growth (+40.13%)
Russell Micro Value (+6.34%)
2008 Market Meltdown: The first half of 2008 was actually sedate compared to the first half of 2022, and the performance differences between growth and value were minor:
Large-Caps - Russell 1000: (-11.2%)
Russell 1000 Growth (-9.06%)
Russell 1000 Value (-13.57%)
Small-Caps - Russell 2000 (-9.37%)
Russell 2000 Growth (-8.93%)
Russell 2000 Value (-9.84%)
Microcaps - Russell Microcap Index (-15.52%)
Russell Micro Growth (-16.38%)
Russell Micro Value (-14.53%)
It was the second half of 2008 when the bulk of the damage was done:
Large-Caps - Russell 1000: (-29.73%)
Russell 1000 Growth (-32.31%)
Russell 1000 Value (-26.93%)
Small-Caps - Russell 2000 (-26.94%)
Russell 2000 Growth (-32.51%)
Russell 2000 Value (-21.17%)
Microcaps - Russell Microcap Index (-28.71%)
Russell Micro Growth (-33.81%)
Russell Micro Value (-23.87%)
The overwhelming takeaway I have from this exercise is the similarity in broad market performance between the first half of 2022 and the second half of 2008. However, the second half of 2008 was much more volatile in terms of day-to-day market moves. I don't believe there have been any days in 2022 that the S&P 500 has moved up or down at least 5%; in 2008 during the third quarter alone there were 16 such occurrences.
I honestly don't know where we are headed in the second half of 2022; the hope is that it's better than the first half.
