📈 The Compound CHART PACK

HAPPY CHART PACK THURSDAY, folks!

Sad news. Today is the final volume of 📈 THE CHART PACK 📈, a weekly collection of charts every week tag-teamed by Chart Kid Matt and myself (who work on the same research team IRL!). Last one forever? I’m not sure. Last one for now? Yes.

If you like this collaboration (or have constructive feedback), shoot me an email at [email protected]. And if you want more where this came from, subscribe to Matt’s newsletter here.

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100 Capital Efficient Companies. 1 Cost-Efficient ETF.

Chart #1: Mirror mirror on the wall…

Chart Kid Matt: Stocks have staged a full V-shaped recovery since the April 8 low. While it feels fast and surprising, history shows this is actually the norm. I looked at the average S&P 500 path in the 12 months before and after bear market lows, then compared it with today’s rebound. While there are exceptions (of course), the chart is a reminder that on average declines and recoveries tend to be V-shaped in nature. 2025 is no exception.

OptimistiCallie: Can I just say that I’m writing this on Wednesday night and I’m so glad none of these charts are about the Fed? (we’ll have more fun with the Fed rate cut in Monday’s post)

It is eerie how much selloffs and recoveries resemble each other. Wall Street likes to say “escalator up, elevator down” to describe the nature of the stock market, but this doesn’t exactly match the desperate days — when tensions are high and emotions are running hot. That’s when the biggest losses (and gains!) happen. This is also why you can’t just tap out of investing when things feel uncomfortable. A beaten-mood can set you up for strong rallies, and there’s nothing like a 20% drop in your portfolio to make you feel all moody.

Chart #2: Missing the best day this year

Chart Kid Matt: Continuing on the topic of the April 8 low, let’s imagine you were an investor trying to time the market and missed that day. What would your year-to-date returns look like without the price action on April 9 (ie the first day of the rebound)? That’s what I’m showing in the chart above — and wow — is there a massive difference. Year-to-date returns if you were to stay fully invested all year? +13.5%. Nice. But if you missed April 9th? Just 3.7%. Oof. Stay invested, folks.  

OptimistiCallie: I am LOVING this theme. Market truths that don’t make sense, but will pull you under the tide regardless. April 9 was an enigma of a day. Stocks opened quietly after a casual 11% slide in the three days prior, then the President just tweeted about buying stocks and the race was on (of course, the 90-day pause on reciprocal tariffs helped). It’s not crazy to wonder how many people at least missed April 9, if not more of that post-Liberation Day recovery.

Think about this: the first month of each of the last 10 bull markets (long S&P 500 rallies of 20% or more after a big drop) has accounted for an average of 21% of the entire bull market’s gains. Removing your emotions from your investing schedule is SO crucial.

Chart #3: Sectors play their own roles

Chart Kid Matt: The chart above compares the year-to-date returns of every S&P 500 sector vs the intra-year drawdowns. Pause and look at some of these stats. Communication services is up 27.9% YTD, but it experienced a 22.7% drawdown. Tech is up 18.8%, but it experienced a 26.2% drawdown. Incredible numbers. Markets move fast these days and this chart shows it. 

OptimistiCallie: This feels like the right moment to remind everyone that sectors play different roles in this complicated ecosystem of facts, psychology and expectations. Tech and communication services (really just another arm of tech in disguise) are leading again this year, yet in order to enjoy this massive year of gains, you had to watch your holdings fall more than 20%, with much of that happening in a matter of days. Typical growth stocks — win big, lose big. Consumer staples and health care, on the other hand, haven’t had impressive years, but they rarely do. They’re the steady Eddys/defensive of the stock market (generally speaking) and if they’re leading, the market at large is probably in a rough patch itself. So this breakdown doesn’t surprise me too much. It’s a good reminder that the best portfolios (in terms of returns) often require you to endure some nasty storms.

Chart #4: Justice for the small fries

Chart Kid Matt: I don’t want you to focus on the absolute levels of forward profit margins here, but instead on the relative position of today’s data versus history. Large-cap margins (on a forward basis, ie 12-month forward net income / 12-month forward revenue estimates) have reached new highs, while those for mid- and small-cap stocks remain below prior peaks. This highlights the operational efficiency and resilience of the largest companies, which have continued to expand profit margins even in a challenging economic backdrop. Bravo, large caps. 

OptimistiCallie: I’m actually going to give props to the little guys here. It is not easy to be a smaller company fighting interest rate and other cost pressures right now. Small- and mid-sized companies are more likely to rely on debt for day-to-day expenses, and they often have less ability to wield pricing power when input costs are rising. So I’m not surprised that large-cap margins have been more resilient. In fact, I think this is the single best explanation for the large vs. small gap we’ve seen recently.

BUT, do you see that margin recovery? It’s hard to spot, but it’s there. Might be a reason not to write these smaller companies off just yet. I wrote my thoughts on small caps here, by the way — a potentially decent value play when value is becoming increasingly tougher to find.

Basically, justice for the small fries. Don’t you dare overlook the workhorses of the stock market 🍟

Huge thanks to Chart Kid Matt (aka Matt Cerminaro) for the charts and thoughts throughout this whole series. Subscribe to his newsletter, and check out Exhibit A, the Compound’s visual storytelling platform that you need for your clients.

Thanks for reading!

Callie

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