JP Morgan echoing a lot of commentary on the surging Magnificent 7:
- mega-cap tech stocks, that such narrow market leadership is becoming “increasing unhealthy”.
- “While the weight of the top 50 stocks within S&P 500 remains roughly unchanged, the largest 10 stocks have continued to increase (now at 33.1 per cent weight) at the expense of the next 40 (down to 35.8 per cent) and the broader index,”
- cap-weighted S&P 500 beat its equal weighted version by about 3% YTD compared to about 12% outperformance in all of 2023
- This “extremely concentrated setup” marks a 50-60 year high
- “If stock leadership remains narrow in 2024, active managers may find themselves in a vicious cycle of again having to compete with momentum chasing index funds and being forced to chase an even more concentrated benchmark,”
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The Magnificent Seven are Microsoft, Apple, Alphabet, Amazon, Nvidia, META and Tesla.
