The S&P 500 fell 0.19% yesterday but, interestingly, the “equal weight” S&P 500 (a notional index that values each stock equally) was marginally up. That’s because more investors are picking between winners and losers on the index—and many of the losers are the “Magnificent Seven” tech stocks, a cohort that includes Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla.
The market as a whole is up 1.73% year-to-date. Given that the year is only a few days old, that pace promises healthy gains ahead.
But only two of the Mag 7 stocks are in positive territory so far, Alphabet and Amazon. All the others are down. Some of them are down bad. Meta has lost 4.39% so far, Apple is down 3.98%.
The collapse of the Mag 7 is important because in the last few years the valuation of those stocks has grown so big that they now form more than 30% of the value of the S&P as a whole. It created a situation where even if you bought an S&P 500 exchange-traded fund, with the intent of diversifying your investments across 500 companies, your results were mostly affected by the Mag 7.
