Join institutional investors, analysts and strategists from the world's largest banks: Subscribe today
Already have an account? log in
‘Magnificent 7’ Crowding Conjures Memory Of Epic Dollar Crash
It's all about the "Magnificent 7" and market concentration.
Bubble talk abounds and the prospect of higher rates in perpetuity amid sticky inflation and hot nominal growth poses a risk to valuations. And yet, high-quality, large-cap growth shares might've succeeded in decoupling from bond yields. And then there's the promise of AI -- whatever that promise is. You know the debate(s).
You probably also know there's no more crowded trade than America's mega-caps. If you needed confirmation, the
I don’t think that the Magnificent 7 should be compared to the dot-com era tech stocks. I remember the mantra of the dot-com era as being that the lack of profitability was not important since there was fundamental change happening with the advent of the internet. The Magnificent 7 companies are profitable. In addition, they have almost a monopoly in their market segment (with the exception of Tesla, of which I am not a fan). Finally, instead of breaking the monopoly, it almost seems like there is government help with protecting these companies’ position and profits (special tax incentives, government contracts, and protection against foreign competition).
Sentence following “Finally …” As I remember (I am old enough), that was the Japanese way the Golden Goose was slain.
Aren’t we supposed to be buying stocks based on future earnings growth?
“That was a joke, sir.”
To add to Swamp Things comment, the US government sees the Mag 7 as necessary to compete with China.
Rereading SwampT’s post, he’s already got my comment covered..