How are they now?
Let’s look at the S&P500 components since May 25, 2023.
This is the second week this year where the rest of the index has actually gained more market cap than the top seven stocks.
Last Friday the Bear Market was declared over. (A New Bull Market in Stocks Has Begun, With More Upside Ahead (businessinsider.com)
Where is the money coming from?
There does not seem to be any financial catalysts that would cause a market to shift focus so quickly over the last three weeks, but “increasing market breadth” is usually a positive signal for stocks. The saying goes, “a rising tide lifts all boats,” but context is always key. In this context, investors who stayed the course and stuck to fundamental investment principles have been rewarded, but as markets have climbed, they may be more inclined to sell some of this year's best performing stocks out of FOHO (fear of holding on) as they reach and pass their all-time highs from 2021. At the same time, the rest of the index may be going up as more cauƟous investors experience FOMO (fear of missing out) and start to re-enter the market now that it has shown more consistent gains. Even as the bear market is declared over, it may be worth asking, “why is it over?” As I have pointed out in the last article, it is much more difficult to know when to sell or invest. This market has been propped up by 7 stocks, if we took those stocks out we’d still be in bear territory even with the rotation away from the mega cap stocks. To use an analogy to describe investors, I’d say, “The high tide can raise the boats in the dock, or the boats can chase the tide out to sea.” I wonder between the two groups of investors (FOHO and FOMO) which one is chasing the tide and which one anticipates where it will be.
If you are an investor tired of chasing the tide, it starts with discovering the purpose for your investments. Wealth is worthless without purpose, and we all need help discovering our investment biases and aligning our portfolios with what we truly value. That’s why Blacor is offering free access to one of our investor risk tools. The Riskalyze tool helps investors identify their personality and works as a starting point to align our portfolios with our values rather than chasing what the market says is valuable.
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