Magnificent Seven Movie Poster
Double-edged sword
As I stated yesterday the S&P 500 index had a very good first half and is up +15% YTD. Great. But let’s look at the details: A big chunk of these gains where generated by a couple of Tech stocks called the Magnificent Seven meaning Alphabet Apple, Amazon, Microsoft, Meta, NVIDIA and Tesla. Actually Tesla didnt see big gains this year but the rest did very well. Especially NVIDIA, which is up +156% this year so far. Impressive isn’t it?
Well it is kind of a Double-edged sword. On the one hand these companies are up because they have excellent business models, generating tons of cash and produce essential goods and services for our daily life. On the other hand it means that the rest of the 493 companies have not gained much. Most are flat. So if you are not invested in those couple of tech stocks you haven’t seen much of this rally. The gains are not equally distributed, they are in contrary very concentrated.
What do you think? Is the Mag 7 success great or rather something to worry about?
