We use cookies to improve your experience on this website. Read More Allow Cookies
What Next for  the ‘Magnificent 7’?

What Next for the ‘Magnificent 7’?

 

The Magnificent 7 stocks (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla) continue to capture the focus of investors as these large growth names have outpaced the bulk of global equities. Their outperformance is notable because eye-popping returns for top stocks tend to occur before they reach the top of the market. Once there, subsequent returns tend to lag the market.

This is a cautionary tale for investors expecting continued outperformance from the Magnificent 7. In fact, rather than seeking additional exposure to these mega cap stocks, investors should ensure their portfolios are broadly diversified to capture the returns of whatever companies ascend to the top in the future.

 

Exhibit 1

View from the Top Annualized returns in excess of the US market before and after joining the top 10 largest US stocks, January 1927–December 2022

 

Caption

In USD. Data from CRSP and Compustat. Companies are sorted every January by beginning-of-month market capitalization to identify first-time entrants into the top 10.

 

0 Comments

Add Comment
Get started

Book a Complimentary Consultation

We’d love to meet you in person to discuss your needs and how we could help. Don’t wait to start turning your ambitions into realities - get in touch today.

Get Started

Contact Us Join Our Newsletter