If you're a fan of American college football, you know the sides to determine a national winner are now drawn up. Come early January we'll have a champion.
If you're a stock market buff you know similar lines for 2015 are beginning to take shape. As James Macintosh in today's Financial Times Short View article pointed out. Here it's known as divergence, the U.S economy expected to do better than pretty much the rest of the globe.
To be sure, there's a couple of layers here among sectors like in football: a good defense facing a good offense. So far this year defensive is winning as those so-called safer sectors like consumer staples, health care and those stodgy utilities nearly everyone love to dislike when their monthly bill rolls around lead the way.
A rough average of those three sectors combined so far produced a 20% return. Not bad and certainly not much being sorry there in being safe, especially when you note the S&P 500 is up 12% for the year. That in itself is a bit of trickery like the old Statue of Liberty play.
Among the offense, though they have scored, it's been a lot of incompletions and failed schemes. Cyclicals like industrials, chemicals and consumer discretionary firms have mimicked the old four yards-and-a-cloud-of-dust game, eking out mid-single digit gains.
Looking forward it seems investors and economists, as Mackintosh notes, are taking a similar tack with investors lining up in a slow-as-she-goes formation and those feisty economists looking for the long, deep ball.
In the market, like football, sometimes unexpected penalties and the referees get in the way, slowing the game down with things like instant replays. To the student of the game oil prices might be a good example here.
Small stocks in 2014 have been pretty much locked out not too different from those football schools not fortunate enough to be part of the BIG 5 conferences. But it's real late in the fourth quarter of 2014. And that brings up the inevitable what's up for 2015?
If there's any lesson from football, it might be last year's winners seldom repeat.
It reminds one of the old elementary schoolyard joke: Two birds are sitting on a fence. One is named Pete, the other Repeat. Pete falls off. Who is left?
The real answer is, whoever is holding the bag.
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