Weekly insights on the markets, economy, and financial planning
Can The Magnificent 7 Stay On Top?
December 20, 2023
Mike Minter
The Magnificent 7 stocks1 continue to capture the focus of investors as these large growth names have outpaced the bulk of global equities. In fact, I wrote about this very subject not too long ago.
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. See chart below.
This is a somewhat cautionary tale for investors too heavily concentrated in these stocks, expecting continued outperformance from the Magnificent 7. It’s not to say that these stocks cannot continue to outperform, because they certainly can. However, the odds of this continued dominance are increasingly slim.
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.
FOOTNOTES
The Magnificent 7 stocks include Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla.
Concerns or questions about how your investment portfolio will hold up in the current market environment? Contact Financial Synergies today.
We are a boutique, financial advisory and total wealth management firm with over 35 years helping clients navigate turbulent markets. To learn more about our approach to investment management please reach out to us. One of our seasoned advisors would be happy to help you build a custom financial plan to help ensure you accomplish your financial goals and objectives. Schedule a conversation with us today.
Can The Magnificent 7 Stay On Top?
The Magnificent 7 stocks1 continue to capture the focus of investors as these large growth names have outpaced the bulk of global equities. In fact, I wrote about this very subject not too long ago.
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. See chart below.
This is a somewhat cautionary tale for investors too heavily concentrated in these stocks, expecting continued outperformance from the Magnificent 7. It’s not to say that these stocks cannot continue to outperform, because they certainly can. However, the odds of this continued dominance are increasingly slim.
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.
FOOTNOTES
Concerns or questions about how your investment portfolio will hold up in the current market environment? Contact Financial Synergies today.
We are a boutique, financial advisory and total wealth management firm with over 35 years helping clients navigate turbulent markets. To learn more about our approach to investment management please reach out to us. One of our seasoned advisors would be happy to help you build a custom financial plan to help ensure you accomplish your financial goals and objectives. Schedule a conversation with us today.
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