Following the Beta Trail

In our Inside the Investment Committee presentation, I mentioned the great start to the year for high beta, domestic cyclical stocks (“high beta” refers to the volatility of the stock compared to the S&P 500). Small cap, semiconductors, miners, and energy stocks have more volatility when compared to the S&P 500 and therefore a higher beta. These areas tend to outperform when the economy is improving, which is why they’re called cyclical stocks — they ebb and flow with the economic cycle. This is exactly what we saw from the October bottom through January.