It’s summer and it’s HOT. Today’s will be a short and sweet edition of TGIF 2 Minutes.
The title for today was almost simply, “Beyond the Magnificent”. But a quick note on the “Magnificent Seven“ is in order.
The seven companies are, of course, Amazon, Apple, Meta (Facebook), Microsoft, Nvidia, and Tesla. This week – and the past several weeks – have seen volatility and shifts of short-term leadership in the stock markets from the Magnificent Seven growth companies to smaller and more value-oriented ones.
Even looking back to the start of the year, there have been bright spots beyond the “magnificent seven” including international and emerging markets. Not all of the seven stocks are up on the year, but for one of the companies (Nvidia) its stock is up so much that it puts the entire market to shame…. or not.
Small companies, although not the highest performing sector for a while, can and have provided steady long-term returns in a balanced portfolio. Small company stocks doing well can indicate enthusiasm for the overall economy, for the ability to start a business and a more friendly bank lending environment.
Value-oriented companies doing well, which can include both large and small companies, can mean long-term optimism toward the stock market and the ability for companies to continue to pay and raise dividends.
When “magnificent” enters the picture, it is certainly welcome, but the situation can get overstated. Magnificent moves in individual stocks, or any aspect of life, can be fleeting or myopic. The ability to see beyond the magnificent and incorporate a broad spectrum of investments, industries, sizes of companies and less overstated but overall high quality can be healthy and reduce risk while adding stability.
This material has been prepared for informational purposes only and is not intended to provide, and should not be relied upon for, tax, legal or accounting advice.