My previous post (about whether there is any evidence that companies with strong brands suffered lower than average declines in their market value during the recent market decline) has generated a lot of interest, plus some suggestions for how the analysis could be extended and improved.
One idea was to extend the reference period to three months so as to capture the 2008 low in the S&P 500 on 20 November, and to extend the recovery period to three months from the S&P 500’s 2009 low on 9 March.
This produces very similar results. Once again, there is a nice symmetry in that the market decline in the “down” period is now 41% and the percentage gain in S&P 500 during the “up” period is 39%. And once again, the portfolio of strongly branded companies registered a decline in value that was 6 percentage points less than the overall market (the aggregate market value of the 101 companies in this portfolio fell by “only” 35%). During the market upturn, there was no significant difference between the performance of the branded portfolio and the overall market.
So there does appear to be empirical support for the intuition that brands provide some degree of downside protection…
