SocGen Finds ‘The Most Depressing Chart Ever!’

SocGen Finds ‘The Most Depressing Chart Ever!’

SocGen’s Andrew Lapthorne has found “the most depressing chart ever”.

And that’s saying something, because Andrew is a colleague of Albert Edwards, which means he’s seen some pretty “depressing” charts in his time.

“Once in a while we create a chart that is truly depressing”, Lapthorne wrote in a Monday note, on the way to explaining the following visual which “measures the percentage of global developed and emerging market stocks that have beaten the S&P 500 on a total return USD basis over one and two years”.

(SocGen)

As you can see from the chart header, that’s a pretty big sample. Out of 16,000 stocks, just 22% of them have managed to beat the S&P over the last two years.

The picture has brightened a bit over the last one year, with “just” 66% of stocks underperforming, but the message is clear: If you want to do well, just pay 9bps (or whatever it is now – maybe it’s less) and buy an S&P index fund.

Obviously, that bodes extremely poorly for active management, something Lapthorne points out.

But more importantly, he says this:

If the measurement of company success is outperforming the 500 largest-cap US businesses supported by the US Federal Reserve, debt-funded share buybacks, and increasingly sophisticated financial products, then you can understand why less business are going public and private equity is booming. I find this depressing.


 

3 thoughts on “SocGen Finds ‘The Most Depressing Chart Ever!’

  1. Mr. Heisenberg — do you see any parallels between the increasing profile of private equity and the broader wealth/income inequality in this country? Massive corporate buybacks are decreasing public float while putting greater and greater ownership in the hands of a few C-suite individuals. IPOs are being floated at much later stages, securing greater gains for entrepreneurs and their mainly private VCs and angel investors, while turning more and more IPO parrticipants into bagholders. And, finally, with stocks at or near all-time highs, PE firms and funds are sitting on record amounts of cash.

    Is private equity becoming the Tiffany of our financial markets, while the rest of us fight for scraps and crumbs at Jared?

    1. Huge scale private equity is a smoke & mirrors trick to benefit PEs – founders do pretty well but any later stage talent tends to be one of the many sources of rent extraction…. it’s a bubble that will end badly and that’s when we’ll all see how much the real bill to society and the broader economy is…. but for now, enjoy e-commerce while riding an Uber and try not to worry too much about the appalling ultimate cost, of which so far we’ve only made the downpayment….

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