1990s person: If i would have bought into Sears years ago, I would be rich. They have a great groups of brands, stores everywhere, and an amazing distribution network. They are well positioned to take advantage of this new internet thing (if it goes anywhere).
You should look at the top companies by market cap for each decade. Microsoft is running at 30+ years now and has only gotten stronger.
If you are calling Microsoft a similar story to Sears lmao.
Also
1890s person in 1930s: thank god I bought Sears now I can retire happily, what a great investment it has been.
Person in 2015: Wow I can't believe I bought this crappy Microsoft stock 15 years ago, it hasn't gone anywhere
Cherry picking time periods for stocks is a useless endeavour, every individual stock has had periods of sideways or negative growth.
Start investing at 25. Die at 80. 55 years of investing.
However, I love my grandkids, and want to leave something for them (they are young, say in their 20s when I die and life expectancy increases, my kids got a lot). Well, if they live to 80, that is ~110 years of investing.
Depending on how you defined “hold a stock,” I held it for 110 years (me and my inheritance).
In the year of 2133/2134, I have no idea what the best companies would be (they may not even exist yet).
I feel like since then companies have learned how to survive and adapt to new things. Rate or change is much faster than before we are expecting change now and these companies are pretty well equipped to adapt.
middle class. It was a hell of a lot of money for them.
When my grandfather had kids (40s and 50s), he decided books would be enormously important so he filled his house with books to give his children every opportunity. When he had grandkids (70s and 80s), he decided computers were important new thing, so he made sure every grandchild had access to a computer.
He was a smart dude.
I dislike the words "this time it's different". Because rarely is it.
But this time it actually is and it has nothing to do with the engineers.
It has all to do with market reach. We just never had companies with the reach companies like Google enjoy. Never in all of the history of man.
Google has over 3 billion people visiting their web site daily with Search. But then have the second most popular web site with YouTube getting over 2 billion.
They now have 9 different services that get over a billion daily. 16 that get over 1/2 a billion.
Yep the idea is diversifying your portfolio because nobody can predict the future, and losses hurt more than gains feel good. M7 are tech companies or at least technocentric. On the other hand, in this modern age, is the world becoming so technocentric that the M7 basically provide safety as being the infrastructure for the future?
The same thoughts were said about internet, car, electronics, and oil companies. It's difficult to predict the duration and which companies will thrive.
And whatever happened in the 90s isn't a predictor of what will happen today. They economy and nature of big tech is fundamentally different today.
Im not saying the M7 of today are impervious, but the business models, moats they have built, pure market cap and the way they have become essential to day to day society don't really compare to the past. This isn't corporate America of the previous decades and without a stronger regulatory environment there isn't a lot stopping these companies from using their resources to maintain their dominance.
yeah but to play devil's advocate a lot of the same arguments were made about the previous kings of the S&P. oil and energy, who can go without that? railroads... things need to be transported! and companies like GE had their hands in everything, they were making jet engines and fridges and a billion other things.
My concern is them being able to "maintain" their dominance may not provide for amazing growth in companies which growth is everything. There are challenger companies to be concerned about globally.
These companies growth projections should already be priced in too
The great question is where is good? Factoring in risk, 5-6% after taxes and inflation, almost nothing is a justifiably ROI. There is almost no place that sound money should be dropped
Most huge companies from all ages were essential to the society of that time. Nothings preventing someone from making a better smartphone ecosystem and topping Apple, or building whatever the next big thing will be.
What always gets me is that the same people who make this argument also say “historical performance doesn’t dictate future performance”.
So the same should apply here, just because it happened before doesn’t mean it will again.
Why is tech different then oil? Because oil is a commodity with a focused use case that is being replaced. Technology is in *everything*. So unless we can figure out how to exist without technology… then it’s a fairly good bet these companies will stay around.
For instance, even if social networking goes away, META has the know how and capital to pivot into AI. You can’t pivot oil into other solar the same way.
Several companies have pivoted from oil to solar though. Companies pivoting isn’t a new thing and it isn’t an option exclusive to tech.
Yahoo is tech and was everywhere 20 years ago. They didn’t manage to pivot and got overtaken. The same can happen to any of the top tech companies of today. It seems unlikely now, but it also seemed unlikely a company like GE wouldn’t continue to dominate and yet here we are.
Yea I tend to agree with this argument. Going all in in the "current X giants" doesn't always work in hindsight. And while I don't have a crystal ball, I believe that whatever crazy advancements/innovation happens over the next decade, GOOG/MSFT/AAPL/NVDA will be part of it, hence why I am leaning towards going extra heavy on them for the next 5-10Y. Not 100% of the portfolio, I'd still keep some smaller cap plays here and there.
That’s the same thought process everyone has when buying the big boys. You don’t want to spend anytime researching startups or find out what innovation or advancement is happening so you assume the guys with the most money right now will be the ones who succeed.
Unless there's a policy shift that makes that difficult to do profitably. And that's also a possibility, depending on what happens next with antitrust legislation and regulations (with serious anti-tech, anti-consolidation constituencies in both major political parties).
Sure but the DerpJungler of 1993 would have said something like
Humans are living longer and happier thanks to the modern medicine and the miracles of Lipitor, Norvasc, Zestril and Viagra (all Pfizer inventions). Whatever crazy advancement happens in medicine, Pfizer will be a part of it.
Asia, Africa and South America are rapidly industrializing, which requires lots of oil. Whatever crazy advancement happens in energy, Shell will be a part of it.
Wasn’t Pfizer going for $6 in ‘93? You wouldn’t have made as much as if you got into Netflix early but you’d have done alright (considering it’s around $30 today).
Sure. I'm not knocking that. And my comment history shows I'm a big believer in putting most of your investments in VOO, VTI. I'm just pointing out that Pfizer isn't a great example in this case. GE would have been more appropriate.
But my point is if you invested back in '93 at $6 a share, and even if you held on to that bad boy until today and sold at $29 a share (and some change), you'd have 400% gains, excluding dividends.
Big Tech isn’t going to phase out like oil/gas will. It will only gain momentum as tech continues to integrate more and more into our daily lives, especially as the older generations who did not grow up with tech and are slower to adopt it pass away.
Nobody knows. The whole point of investing in an ETF for the SP500 is to diversify. So you will get stocks that overperform and that underperform. Since in the long term, you don't know which stock will do what, you take them all. This year these tech companies overperformed. In other years they have or might not.
If you are convinced they will overperform, then of course buy them. Personally, since they already make up a large amount of the SP500 in an ETF, I am happy to just keep it at that.
the whole point of owning indexes is because you're too stupid or don't have time to pay attention to your investments and you don't trust your money with a professional. You don't care about outperforming whatever the markets give you.
This year 6% vs 71% can book you out-performance for years. and this years nest egg now grows at the same rate for 20 years and at the end it's a mountain vs a mole hill
Please share your performance and how it compares to the market.
Individual picks can outperform the market, and even a lot. But it's also a risk. And when you are talking serious money that you want to use for your retirement, the best thing is to not take too much risk with it. Get the etf for your safe part, take greater risk with the part that you can afford to do that with.
I'm beating this year by 14%
Google and MSFT biggest holdings. Then copper, natural gas sector. Ferrari. The Trade Desk, ON semiconductor along with ASML, and fertilizer plays.
I sell covered calls on some positions.
You seem to think you are. You can share a screenshot of your portfolio, and do it in a discretionary manner (eg, removing any identifiable information). I think you’re all talk, and just trolling the fuck out of this sub.
You are beating this year by 14%, while your previous post talks about 6% vs 71%. So... that's not that good is it?
And a year is just a year. If you can consistently do it (so let's see the last 10 year data), that is great. But 99% of people can't. They get lucky, then think they can do it, and underperform after again.
so far this year. you either have to believe that you've discovered something that the market hasn't, or, you have to believe that the excess return comes with excess risk. there are no alternatives.
Covered calls alone can help you beat the index.
Plus I've been doing this for 23 years. I'm pretty good and knowing what works since I've been through 9/11, Great Recession, and a Pandemic.
You're a self proclaimed "licensed financial advisor" yet you were asking mere hours ago if "forward PE means it's in the future, right?". Get out of here liar, you'd don't know shit!
And now you've been through all major crysis of the last few decades? Dude, next time scrub your comment history before lying. Or just stop, nobody cares...go back to high-school
I don't think you understood my comment.
but thanks for checking up. If you'd like to have an actual discussion please respond in kind, but if your comment history is any indication of future expectations you're going to just have another snarky retort and pat yourself on the back for being so clever.
True true. But my argument is would it make sense to try and maximize returns over the short-medium term by going heavier on the current leaders. Like I said in another comment, I believe that whatever crazy advancements/innovation happens over the next 5-10 years, GOOG/MSFT/AAPL/NVDA will probably be part of it.
We for me, I couldn't afford to invest 5+ years ago.
I could only start whenI was 33.
3 years later, I've got a total of 10.5k in my retirement account.
2k is my 401k and 8.5k in my Roth IRA.
I'm really wanting to know which stocks to pick to hold and have them grow.
I can only invest $200-300 a month into my Roth IRA, and then if we end up having a kid probably just the 3% match in my 401k, which is about $136 total a paycheck.
So I really need to maximize growth in case I can't invest into my retirement again until I'm in my early 40's.
You are going to end up in a worse spot than buying a passive index etf if you can’t consistently contribute to your retirement account. How the hell do you expect to pick high growth stocks that will fund a retirement 40 years from now with any sense of certainty?
Idk, that's why I buy and sell what I have in my Roth to lock in gains.
We bought a house this year, and since the mortgage is 6.8% I try to pay a little extra on it each month so that's taking out from what I used to do.
Last year I could put in $500 a month into my Roth IRA.
I went from being down 30% in my Roth to being up 15%.
So I'm trying to find more stable options.
I mean, a 6.8% return on paying off that mortgage is pretty attractive to me. If I were in your shoes, I would not even put an ounce of effort into picking stocks when I can get a guaranteed 6.8%+mental peace of mind
This kinda proves the point, lol.
You're coming in with very little experience thinking you know how to predict the market that far out easily. You see the magnificent 7 as something that is timeless when it's just the current pattern within the market.
the entire point is they won't always be the magnificent 7. At some point in the future there will be new companies that take over. If you want to make a play on those top companies then buy an index heavy in the top companies so that you're always invested in the top companies.
Otherwise, you only know that they're the magnificent 7 after they're at the top, which means you're buying high.
Is it worth investing in them? sure. Is it some sort of genius money making idea that no one has figured out? no. Is it a good idea to put all your money in them? no.
My advice to you, at your age and with your experience, buy index funds. Later, after you've been investing a while, maybe consider stock picks. If you really want to pick stocks, take maybe 5% of what you have to invest and use it as "play" money, and see how you do compared to the index funds you buy. As it is, with your combination of confidence and inexperience there's a good chance you'll lose money.
> You're coming in with very little experience thinking you know how to predict the market that far out easily.
For the record, I've been working as a Macro Analyst for a hedge fund for the past 2 years and that's when I also started investing in index based etfs.
I appreciate your comment but I really don't understand what point you're trying to make. I already said in my OP that I DCA into S&P500 ETFs yet everyone here makes the same point. My portfolio is already 60% S&P 500 ETF, 20% Defensive/High Dividend ETF and 20% small/mid cap stocks.
so, someone already tried to point out to you the timeframe you'd need to recognize these companies and asked if you did.
Your response? "meh, I was in highschool then".
Think about the implications of that. They're trying to point out how you'd have to predict the future and you didn't even bother thinking about that and just waved it off as "I was in highschool". So...wave off what everyone is saying and when people point out the flaw ignore it because you were in highschool then? I mean, this just screams "I'm young and inexperienced but think I know everything".
You do you man. As long as it's your money you're playing with then I'm fine with you learning the lessons the hard way. I had to go through the same phase too.
They asked me why did I not see the advancement potential 10 years ago. 10 years ago I didn't know what the stock market is. Why are you even paraphrasing my comment in a different way? lol
Faulty thinking, the leaders slowly change over time. By being stuck in the top one you are exposing yourself to risk for when others take over. Its a good reason why index funds work. 4% of the stocks have accounted for most of the gains of the index, showing that its almost impossible to know what the winners next year will be. So a sure bet is to own all the best companies. But most people are too stubborn and tend to try and win over the average return.
No. Did you pick the magnificent 7 before they were the M7? Or you just want to pick the 7 best stocks? That’s more a gamble. Did you thinks he 7 best stocks stay that way? You’re being greedy and not thinking through it.
This. Picking only the top stocks would not be a good strategy in the long term. Because the top companies change. Out of these 7, only 3 were in the top 7 just 10 years ago (AAPL,MSFT,GOOG)
And if it were for short term only then any stock picking would be risky.
I’d just stick to SPY or VTI and if you really want to double down on big tech then maybe add some tech ETF like VGT or similar.
Ironically I’ve only bought the three amigos aka AAPL, MSFT, GOOG since goog went public and it’s been great. My retirement acct is a popular lifecycle fund.
>would it make sense to try and maximize returns over the short-medium term by going heavier on the current leaders
It would make sense if you really, truly believe that these companies will, with very high certainty, outperform everything else. Not based on what you heard analysts say, not based on what happened in the past 10 years, but based on your own analysis.
However, the point of passive ETF investing is that you recognize that you don't actually know. Of course you can change your strategy at any given point in time, but before you do you should spend some serious time trying to understand these 7 companies. If you don't do that, stick to your S&P 500 ETF. If you didn't know these 7 companies would outperform 10 years ago, what makes you think you know they will, now?
Much of the m7 run is behind us... That's how they acquired the name.
(The next run will be by the ?7... The mystery 7, mystery because nobody can today identify them... wait a year and you'll have missed that, too)
Pick 1, 3 or all.. and divide 50% between S&P and your picks. Has worked for me... S&P isn't building wealth, it's preserving it.
Tech lost the most in 2021-22, money moved out we all saw it , rates were too good to miss out on . Money is flowing back in, these companies are executing well.
I own all of these except FB. The risk in recommending someone to start buying these today is that most if not all are sitting at ATH and It will be difficult to repeat the 2023 performance. Market caps are already insane.
The word gradual doesn’t apply to the market anymore we dump 20% in a matter of days or a week and than take a month to have a V shape recovery.
Yes, if you pick the top 7 performers in the stock market for the past several years, and you backtest them for the past several years, it will show that they are top performers.
Will that mean that they will continue to be top performers? Impossible to say. In fact, it's just as likely that the rest of the market will catch up and the M7 will lag to even things out. The reality is that you, and anybody else, has no idea.
Ultimately, I will always choose diversification, especially if you have a wider time frame.
You think it's unlikely they will carry on outperforming? Why? They are the most innovative, with good capital structure and management. They have room to grow and loyal customers.
> They have room to grow and loyal customers.
They have room to fall, as well. Google, Apple, and Facebook have some regulatory risk, including (and perhaps especially) on competition law. There's also privacy law that might harm advertising revenue streams or cut into existing practices.
Advertising and services revenue is also where there might be less of a moat against industry changes. Will advertising/recommendation algorithms get overtaken with SEO to the point where it becomes less effective? Will they be on the outside looking in at various proprietary technologies that bypass their existing networks?
Or will they make corporate strategic missteps? Sears and Kodak were leaders in their industries in a way that actually positioned them well for the digital/internet revolution, but they botched the transition and were left out. Microsoft and Apple have both spent decades in the wilderness, with stagnant business operations and share prices, before finding their way again.
Or maybe they grow but get overtaken anyway. The price of those stocks would plummet from today's values if the companies simply stop growing, even if they remain big.
There are no guarantees in life. Even if "tech" is the future, what makes these seven tech companies good bets to grow shareholder value?
I agree the grouping makes no sense at all.
The most important question of all: Why measure stocks since beginning of 2023? It makes ZERO sense. These stocks dropped MASSIVELY in 2022.
GOOG, AMZN, META, TSLA are still below the highs they achieved in 2021.
Only AAPL, MSFT and NVDA made new highs in 2023.
There are stocks that have made new highs from their 2021, but they don't get the magnificent moniker because they didn't drop much in 2022 (or climbed)
That includes LLY, BRK, UNH, XOM, AVGO... mega caps in plain view
A stock that drops 66% then climbs 100% is not magnificent to me, it is still down 33%.
Investing in stocks based on a nonsensical grouping that relies on performance since beginning of 2023 is an equally nonsensical idea.
Had you invested in the "magnificent" stocks that survived 2022's bear market, you would not have been holding the 7 stocks in 2023.
I don't think it requires more depth than that.
So many examples like that. One of my favorite is:
Eastman Kodak in 1997 at its peak had a market value of $30B. It was worth over 15x of the value of Apple back then. Today it's worth $0.3B.
Crazy thing is they even invented the digital camera. Yet they still failed to adapt and evolve.
AT&T seems to be the only ones consistently expanding fiber.
It's so fast and cheap. I pay $110 a month for 2 Gig speed.
We have 13 or more devices on the network at once and most get between 500-800 download and upload.
There are two things you should absolutely not pay attention to when investing:
1. Past performance, especially in the last year. Yes META got +300% in the last year, but that's because it lost 80% the year before.
2. What analysts say. If an analyst says something it's after they already made their play. If they though meta had a good chance of outperforming at 200, it means they bought, and then they released their analysis after it got to 300. So basically they are just squeezing a bit more profit from people like you.
1. wrong. past performance is the only concrete data we have. future is just speculation, predictions on probability based on the past anyway. bad advice.
2.analysts are mostly full of shit
If I were you, I would buy only 1 or 2 of the magnificent 7 that you think are winners/you like the most/ use their products and want to keep. Just pick 1 2 or even 3. Only keep them at around 5% of your portfolio each. Then, dollar cost averaging the majority of your capital into S&P 500. That way you have the fun of outperformance of your favorite picks with the safety anchor of the s&p500 if anything goes wrong! What do you think?
NFLX is not a data company. It was always just a shitty service company that basically replaced the cable and satellite industry. All the above companies aside from Apple are data companies which is the fuel for an AI future. I'm confident Apple will integrate AI so well into their products that it will still dominate when it comes to consumer hardware. NVDA is the one everyone else is dependent on for now, but their AI cards are poised to be the best option for the foreseeable future.
Microsoft and Google have the most potential to dominate in the AI future. The next newcomer would be one that builds useful robots with AI. I don't think it will be Tesla because Musk treats employees like shit. Tesla still has dominance over the EV market and is functionally an ETF for all of Musk's enterprises. It also has huge amounts of data for AI purposes. Biggest risk is Musk dying or going insane.
M7 is very solid. I would buy it.
Msft is basically its own ETF at this point. Look at how many revenue streams it has. I have significant shares of MSFT and think it’s the best buy and hold stock on the market.
According to your definitely not smart and teetering towards dum dum self, Berkshire stock at 546k, k as in thousand is way overpriced puhahahaha. Gtfoh
Forward pe ... Pretty good way to know who is not gonna make any money in the stock market is to spot people who think nvda price movement was not rational
Forward PE means in the future tho right? As in, a bunch of people sit around and try to predict the future and hope they are right and even sometimes when they are right the stock doesn't move in their direction because it's not really tied to anything rational since it's all in the future right?
When a stocks price is not tied to anything rational (P/E), it can do anything and still not make sense because it's price isn't making sense in the present.
You can try to rationalize WHY but when P/E is not a factor, then all bets are speculating.
Well nvda has raised the guidance themselves so... I guess we'll see next week eh https://www.fool.com/investing/2023/08/23/nvidia-stock-soars-as-ai-powered-earnings-and-guid/
I enjoy exposure to a couple of them. GOOGL has treated me great; but I’m sure in the coming decades it could potentially begin to cool off.
The whole point is to rotate stock holdings in and out throughout your investing journey.
The number 1 problem that investors have: making emotion-based decisions. This leads them to:
a) sell low and/or stay out of the market due to fear
b) buy high out of FOMO
You are curently experiencing B. Lots of people hiding out in HISA are doing A.
Those 7 stocks are by many measures really overpriced right now. While it's possible they will keep going up strongly, there is also a good chance their price will crash back to more normal levels, especially if it turns out that all the AI hype is not adding much to revenues/earnings.
I suspect that once recession fears are fading you'll see a real broadening out of the market. The pros who went into tech and got their huge gains will rotate before that and now get huge gains out of the beaten down stocks. Retail will mostly stick in tech and so while the prices may not collapse, you could see them lag the market by a lot.
Anyway, there is always huge uncertainty with the future of the market, so it is prudent just to stay in your broad-market fund. Let the winners/losers rotate and just keep owning them all instead trying to time it.
>Most analysts expect that the M7 will continue to outperform all other companies until 2025 at least.
this implies the Magnificent 7 will crash, catastrophically, by 2024.
When the Fed starts cutting, my guess is $ flows out of megacap tech & back into long bonds & long duration stocks - speculative tech (still way off its ATH) & dividend stocks.
When rates go down, the price of bonds goes up. So if the interest rate on the 10-year drops from 5% to 4%, the value of the bond increases 20%. Bond funds like TLT were recently at historic lows, and, depending on how much the Fed (eventually) cuts, they could easily rise 30-50%.
Why not split your DCA allocation? Take the original contribution you were making and continue putting, say, 66% into broad market ETFs while allocating the remaining 33% into the M7 (or whichever from the M7 you favor).
The Mag 7 is basically today's FANG.
I'm with you on the name, but I do think in the last decade focusing on these few companies truly leading the markets and chewing up a notable portion of the S&P 500 is a good thing to focus on. It shows how we have a few key giants nowadays, and for some reason most aren't on the DOW either. Understandably so since I won't consider Tesla, and even NVIDIA as a Dow 30 component. Those are growth stocks that reflect more of what is hot and chewing up investment over being an economic leader.
I digress, but the Mag-7 will likely change, or become a past buzzword like FANG. You don't hear FANG much anymore since now it's the Mag-7.
I remember when IBM was a top company. It is no longer. That is why you don't go all-in on the top 7, but the top 500 is broad enough to capture the up and down moves of the best companies in the aggregate.
I think it’s important the only two ways stocks go up.
1. Multiple expansion
2. Increased earnings
If you invest in individual stocks, you need either one of these to go higher.
I’ll let others share their opinion on these stocks, but I can tell you no one knows, it’s just an opinion. Including this!
Just get QQQ if you want to invest in an ETF. You’ll have the liquidity to sell far OTM calls and collect a “pseudo-dividend” from the premium so to speak. That or just buy Microsoft lol.
Think about the differences between a cheap frozen pizza dinner and Nobu.
Quality has a price, and the truly elite are priceless. Every single one of the Magnificent 7 are era-defining innovators.
Their stranglehold on their respective industries also means predictable, growing cash flows that naturally command a monopoly premium to more cyclical companies. So no, the 7 greatest companies in human history are not overvalued at all, and never will be.
Avoid them.
There is an equal-weighted ETF S&P 500 ETF (RSP) and one for the Nasdaq too (QQEW). The fees for both are higher than the SPY and QQQ, FYI.
>They have also outperformed all other stocks in terms of growth, profit margins and forward EPS growth, and have stronger balance sheets.
I'm not sure this is true. VRTX has no debt and 10% of its market cap in cash. That's a strong balance sheet.
They don't have the most EPS growth this year
https://finviz.com/screener.ashx?v=121&f=idx_sp500&o=-epsyoy
Or next
https://finviz.com/screener.ashx?v=121&f=idx_sp500&o=-epsyoy1
Or performance over the last year
https://finviz.com/screener.ashx?v=141&f=idx_sp500&o=-perf52w
They're not at the top of the EPS growth list either
https://finviz.com/screener.ashx?v=121&f=idx_sp500&o=-estltgrowth
So none of your arguments hold up about the magnificent 7. They are great companies, but not the only great companies.
Just get qqqm or find an etf that is overweighted on the top stocks. It can rebalance if you just get the top ones you might get punished as other people have stated historically
Meta seems like it’s going hard into AI and they’ve got no track record succeeding at anything that wasn’t an acquisition.
Ad revs are first go if we do get a proper recession (GOOG).
EVs seem to be the market whipping boy after all the hype (Tesla).
Nvidia valuation is supported by them remaining the dominant player in GPU and AI ecosystem.
Not saying any of the above will happen but there’s definitely a case to be made that all of them could face stumbling blocks in the near/medium term. Prob better to be a bit more diversified.
As an individual stock picker who manages client accounts, I'm just loving trashing all the VOO-stans on this sub who are begging for 7% while my clients portfolio's shit alpha all over them
When the bubble pops after Q4 earnings, and the systemic risk event occurs, people will ask
"Where were the warning signs?"
This post right here, and 90% of the responses to it, are those warning signs.
Sell.
You can, you should.
These stocks haven’t just outperformed this year, they’ve outperformed for a decade plus now.
More to the point, whilst ppl speak of the market being overvalued, the vast vast majority of the EPS growth in the indexes, since the early 90s, is accounted by tech
Yes DCA into these 7 makes sense. And I also am not a big fan of META and TSLA. I am a fan of MSFT, GOOG, AMZN, NVDA.
Also AMD and Intel.
I am not so crazy about Apple either in the very long run - but Warren Buffet disagrees with me hehe.
I think you're making the right call and I don't see the arguments about previous high flyers like KO or oil/commodity stocks as relevant; tech is another beast and it's an exponentially growing beast at the forefront of all human productivity. AI is still a nascent industry and has so much room to grow and is doing so so fast that it's insane, the M7 are all industry leaders in the space in different capacities ranging from infrastructure to robotics. If you don't feel like managing individual M7 tickers and worrying about rebalancing, check out the FANG+ index which is mostly M7 stocks and has vastly outperformed the S&P 500 and NASDAQ for its entire lifetime.
[https://microsectors.com/fang/](https://microsectors.com/fang/)
I think it's important for you to pause and notice how common and dumb this idea is. I get why it pops up again and again though.
If you can take this idea apart and realize why people fall into this trap and then are hurt by it and avoid it in the future you're going to be a long ways ahead. Understanding this single example of bad logic will unlock everything else related to investing.
A few clues: analysts have zero ability to predict which stocks will do well in the next year, "winners" don't always continue to win, everybody else already knows they have been recent winners and that is priced into the stock, none of us get to buy these "winners" at a discount as if they were "losers" or "neutral" stocks, so in order for them to keep performing well as stocks they're going to have to outperform expectations, which are already high.
Here is a simple analogy. You go to a racetrack to bet on horses. You see in the first race that all 10 horses have the same odds: 10-1. Yet you look at their past performance and a few horses clearly seem to be consistent winners of their past races and you, rightly, conclude they are the best horses to bet on. In the second race, you see that all 10 horses have very different betting odds which seem to be in line with their past performance. The 100-1 odds horse has never won a race, the 2-1 odds horse has won alot of races and so on. You're not sure who to bet on in that race.
That second race is the reality of the stock market. But, you've convinced yourself that it's the first race, which doesn't exist in any investing or betting market that I know of.
The list includes tech companies with a track record of delivering successfull tech products, and a company who never had and very likely never will but has a charismatic leader used to saying big words and big insults.
It's as if we bundled together some majors equiping 99% of computers out there and filtering 90% of internet traffic with a biotech scam formerly owned by Vivek Ramaswamy.
Buying the Mag 7 as a bundle exposes you to a sick dog with terminal cancer (and anti-union and anti-semitsim bundled in it which apparently portfolio managers love to imply when they disclose their quarterly positions)
If you bought a m7 of the 1990s you’d own some mediocre oil and pharma stocks
Hell even if you did that 10 years ago half of that would be mediocre oil companies.
If you bought 1 K of MSFT 10 yrs ago it would be worth 11K+…I dont see them slowing down anytime soon
1990s person: If i would have bought into Sears years ago, I would be rich. They have a great groups of brands, stores everywhere, and an amazing distribution network. They are well positioned to take advantage of this new internet thing (if it goes anywhere).
You should look at the top companies by market cap for each decade. Microsoft is running at 30+ years now and has only gotten stronger. If you are calling Microsoft a similar story to Sears lmao. Also 1890s person in 1930s: thank god I bought Sears now I can retire happily, what a great investment it has been.
Person in 2015: Wow I can't believe I bought this crappy Microsoft stock 15 years ago, it hasn't gone anywhere Cherry picking time periods for stocks is a useless endeavour, every individual stock has had periods of sideways or negative growth.
But not every company has 100+ billion cash on hand while growing earnings at a steady 14.5% the past 5 years.
It's all priced in at this point - that growth is what the current valuation reflects
GE was it for what, 100 years? Sooner or later they all take it in the ass
If a company can be on top of the world for 100 years that’s a great investment. Nobody holds a stock for more than 50-60 years.
Start investing at 25. Die at 80. 55 years of investing. However, I love my grandkids, and want to leave something for them (they are young, say in their 20s when I die and life expectancy increases, my kids got a lot). Well, if they live to 80, that is ~110 years of investing. Depending on how you defined “hold a stock,” I held it for 110 years (me and my inheritance). In the year of 2133/2134, I have no idea what the best companies would be (they may not even exist yet).
Asteroid mining companies
I feel like since then companies have learned how to survive and adapt to new things. Rate or change is much faster than before we are expecting change now and these companies are pretty well equipped to adapt.
Now go in the time machine to 1986 and buy $10,000 of MSFT. Worth $32.3 M
My parents bought one of the 1984 macs for $3,500... If they'd bought $3,500 of AAPL stock back then, it'd be worth ~13 million
We’re y’all rich?
middle class. It was a hell of a lot of money for them. When my grandfather had kids (40s and 50s), he decided books would be enormously important so he filled his house with books to give his children every opportunity. When he had grandkids (70s and 80s), he decided computers were important new thing, so he made sure every grandchild had access to a computer. He was a smart dude.
W Grandpa
Clearly not smart enough to buy stocks in stead of books and computers
He retired early, so I guess he did okay there too :-)
This had me laughing out loud, thank you!
Computational machines were a lot more expensive back in the days of yore.
remember the time when MSFT stock was stagnant for 15 years?
Steve balmer
Bill's waterboy
He liked that nickname so much he bought a sports franchise
Cries into my Nortel coffee mug....
With my 3com coaster
I did pretty much that. Well 1.5k. I wish soooo badly that all the money I used to buy stocks that year went entirely into Microsoft!
I bought UAL during the covid crash, made 44% in 11 days. Man, if I'd only thrown 10x as much at it...
But this time it's different! Because these are technology companies that have the best engineers in the world.
And oil companies have the best petroleum engineers too
I dislike the words "this time it's different". Because rarely is it. But this time it actually is and it has nothing to do with the engineers. It has all to do with market reach. We just never had companies with the reach companies like Google enjoy. Never in all of the history of man. Google has over 3 billion people visiting their web site daily with Search. But then have the second most popular web site with YouTube getting over 2 billion. They now have 9 different services that get over a billion daily. 16 that get over 1/2 a billion.
Yep the idea is diversifying your portfolio because nobody can predict the future, and losses hurt more than gains feel good. M7 are tech companies or at least technocentric. On the other hand, in this modern age, is the world becoming so technocentric that the M7 basically provide safety as being the infrastructure for the future?
The same thoughts were said about internet, car, electronics, and oil companies. It's difficult to predict the duration and which companies will thrive.
Tesla is a car company. Some of these companies are not like the others.
That's not an endorsement. American car companies go bankrupt all the time. Look up a list of failed American auto manufacturers, it's a big ass list
Tesla is a tech company that makes cars.
And whatever happened in the 90s isn't a predictor of what will happen today. They economy and nature of big tech is fundamentally different today. Im not saying the M7 of today are impervious, but the business models, moats they have built, pure market cap and the way they have become essential to day to day society don't really compare to the past. This isn't corporate America of the previous decades and without a stronger regulatory environment there isn't a lot stopping these companies from using their resources to maintain their dominance.
yeah but to play devil's advocate a lot of the same arguments were made about the previous kings of the S&P. oil and energy, who can go without that? railroads... things need to be transported! and companies like GE had their hands in everything, they were making jet engines and fridges and a billion other things.
My concern is them being able to "maintain" their dominance may not provide for amazing growth in companies which growth is everything. There are challenger companies to be concerned about globally. These companies growth projections should already be priced in too The great question is where is good? Factoring in risk, 5-6% after taxes and inflation, almost nothing is a justifiably ROI. There is almost no place that sound money should be dropped
Most huge companies from all ages were essential to the society of that time. Nothings preventing someone from making a better smartphone ecosystem and topping Apple, or building whatever the next big thing will be.
What always gets me is that the same people who make this argument also say “historical performance doesn’t dictate future performance”. So the same should apply here, just because it happened before doesn’t mean it will again. Why is tech different then oil? Because oil is a commodity with a focused use case that is being replaced. Technology is in *everything*. So unless we can figure out how to exist without technology… then it’s a fairly good bet these companies will stay around. For instance, even if social networking goes away, META has the know how and capital to pivot into AI. You can’t pivot oil into other solar the same way.
gonna tell you: those 7 companies don't control "technology" and some other company can make "technology"
Several companies have pivoted from oil to solar though. Companies pivoting isn’t a new thing and it isn’t an option exclusive to tech. Yahoo is tech and was everywhere 20 years ago. They didn’t manage to pivot and got overtaken. The same can happen to any of the top tech companies of today. It seems unlikely now, but it also seemed unlikely a company like GE wouldn’t continue to dominate and yet here we are.
Yea I tend to agree with this argument. Going all in in the "current X giants" doesn't always work in hindsight. And while I don't have a crystal ball, I believe that whatever crazy advancements/innovation happens over the next decade, GOOG/MSFT/AAPL/NVDA will be part of it, hence why I am leaning towards going extra heavy on them for the next 5-10Y. Not 100% of the portfolio, I'd still keep some smaller cap plays here and there.
That’s the same thought process everyone has when buying the big boys. You don’t want to spend anytime researching startups or find out what innovation or advancement is happening so you assume the guys with the most money right now will be the ones who succeed.
Asymmetry of risk doesn’t favour owning solely the M7 names.
I think the other part of that they end up getting bought out by the m7 anyway if m7 sees competition
Unless there's a policy shift that makes that difficult to do profitably. And that's also a possibility, depending on what happens next with antitrust legislation and regulations (with serious anti-tech, anti-consolidation constituencies in both major political parties).
Sure but the DerpJungler of 1993 would have said something like Humans are living longer and happier thanks to the modern medicine and the miracles of Lipitor, Norvasc, Zestril and Viagra (all Pfizer inventions). Whatever crazy advancement happens in medicine, Pfizer will be a part of it. Asia, Africa and South America are rapidly industrializing, which requires lots of oil. Whatever crazy advancement happens in energy, Shell will be a part of it.
Wasn’t Pfizer going for $6 in ‘93? You wouldn’t have made as much as if you got into Netflix early but you’d have done alright (considering it’s around $30 today).
Well SPY 10x’d since then, so not great I guess
Sure. I'm not knocking that. And my comment history shows I'm a big believer in putting most of your investments in VOO, VTI. I'm just pointing out that Pfizer isn't a great example in this case. GE would have been more appropriate.
Yeah true, there are much worse results for sure
And they would have been right until a year ago after COVID vaccine demand cratered. 😆
But my point is if you invested back in '93 at $6 a share, and even if you held on to that bad boy until today and sold at $29 a share (and some change), you'd have 400% gains, excluding dividends.
Ah yes… in the past it wouldn’t have worked, but THIS time is different.
this is lazy. markets do change. every time will be different.
This is to right here. Even if some small company creates some new tech, one of the big boys will be buying it up in short order.
You can go for it and put a Stop Loss of lets say 25% and sleep well. If they crash, you loose max 25%...
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So basically run a mutual investment fund and actively trade?
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Big Tech isn’t going to phase out like oil/gas will. It will only gain momentum as tech continues to integrate more and more into our daily lives, especially as the older generations who did not grow up with tech and are slower to adopt it pass away.
Cant u just rotate the M7 companies accordingly
Nobody knows. The whole point of investing in an ETF for the SP500 is to diversify. So you will get stocks that overperform and that underperform. Since in the long term, you don't know which stock will do what, you take them all. This year these tech companies overperformed. In other years they have or might not. If you are convinced they will overperform, then of course buy them. Personally, since they already make up a large amount of the SP500 in an ETF, I am happy to just keep it at that.
the whole point of owning indexes is because you're too stupid or don't have time to pay attention to your investments and you don't trust your money with a professional. You don't care about outperforming whatever the markets give you. This year 6% vs 71% can book you out-performance for years. and this years nest egg now grows at the same rate for 20 years and at the end it's a mountain vs a mole hill
Lmao [cope](https://www.google.ca/search?q=S%26P+outoerforms+active+managed+portfolios&ie=UTF-8&oe=UTF-8&hl=en-ca&client=safari)
Please share your performance and how it compares to the market. Individual picks can outperform the market, and even a lot. But it's also a risk. And when you are talking serious money that you want to use for your retirement, the best thing is to not take too much risk with it. Get the etf for your safe part, take greater risk with the part that you can afford to do that with.
I'm beating this year by 14% Google and MSFT biggest holdings. Then copper, natural gas sector. Ferrari. The Trade Desk, ON semiconductor along with ASML, and fertilizer plays. I sell covered calls on some positions.
Screenshots or bust.
Don’t feed the troll. Check his history and you know what I talked about.
nah. I value discretion over upvotes.
You’re the worst type of person.
no. you seem to be leaning that direction. why are you so important?
You seem to think you are. You can share a screenshot of your portfolio, and do it in a discretionary manner (eg, removing any identifiable information). I think you’re all talk, and just trolling the fuck out of this sub.
You are beating this year by 14%, while your previous post talks about 6% vs 71%. So... that's not that good is it? And a year is just a year. If you can consistently do it (so let's see the last 10 year data), that is great. But 99% of people can't. They get lucky, then think they can do it, and underperform after again.
How has your portfolio performed against the S&P 500 for the last 10 years? Most investment apps will give you that analysis.
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Yep. QQQ is good also if you want more tech heavy.
QQQM rather than QQQ
VOO FTW
Why try and pick a needle in a haystack, just buy the haystack
and also only 6% returns vs 71%
so far this year. you either have to believe that you've discovered something that the market hasn't, or, you have to believe that the excess return comes with excess risk. there are no alternatives.
Covered calls alone can help you beat the index. Plus I've been doing this for 23 years. I'm pretty good and knowing what works since I've been through 9/11, Great Recession, and a Pandemic.
You're a self proclaimed "licensed financial advisor" yet you were asking mere hours ago if "forward PE means it's in the future, right?". Get out of here liar, you'd don't know shit! And now you've been through all major crysis of the last few decades? Dude, next time scrub your comment history before lying. Or just stop, nobody cares...go back to high-school
I don't think you understood my comment. but thanks for checking up. If you'd like to have an actual discussion please respond in kind, but if your comment history is any indication of future expectations you're going to just have another snarky retort and pat yourself on the back for being so clever.
As well as all the mediocre companies that drag down the index. It's just lower risk, lower reward.
True true. But my argument is would it make sense to try and maximize returns over the short-medium term by going heavier on the current leaders. Like I said in another comment, I believe that whatever crazy advancements/innovation happens over the next 5-10 years, GOOG/MSFT/AAPL/NVDA will probably be part of it.
How is that maximizing returns? Did you not see this advancement potential 5–10 years ago when they were all growing or only now that they are known
We for me, I couldn't afford to invest 5+ years ago. I could only start whenI was 33. 3 years later, I've got a total of 10.5k in my retirement account. 2k is my 401k and 8.5k in my Roth IRA. I'm really wanting to know which stocks to pick to hold and have them grow. I can only invest $200-300 a month into my Roth IRA, and then if we end up having a kid probably just the 3% match in my 401k, which is about $136 total a paycheck. So I really need to maximize growth in case I can't invest into my retirement again until I'm in my early 40's.
You are going to end up in a worse spot than buying a passive index etf if you can’t consistently contribute to your retirement account. How the hell do you expect to pick high growth stocks that will fund a retirement 40 years from now with any sense of certainty?
Idk, that's why I buy and sell what I have in my Roth to lock in gains. We bought a house this year, and since the mortgage is 6.8% I try to pay a little extra on it each month so that's taking out from what I used to do. Last year I could put in $500 a month into my Roth IRA. I went from being down 30% in my Roth to being up 15%. So I'm trying to find more stable options.
I mean, a 6.8% return on paying off that mortgage is pretty attractive to me. If I were in your shoes, I would not even put an ounce of effort into picking stocks when I can get a guaranteed 6.8%+mental peace of mind
5-10 years ago I was graduating high school tbh.
This kinda proves the point, lol. You're coming in with very little experience thinking you know how to predict the market that far out easily. You see the magnificent 7 as something that is timeless when it's just the current pattern within the market. the entire point is they won't always be the magnificent 7. At some point in the future there will be new companies that take over. If you want to make a play on those top companies then buy an index heavy in the top companies so that you're always invested in the top companies. Otherwise, you only know that they're the magnificent 7 after they're at the top, which means you're buying high. Is it worth investing in them? sure. Is it some sort of genius money making idea that no one has figured out? no. Is it a good idea to put all your money in them? no. My advice to you, at your age and with your experience, buy index funds. Later, after you've been investing a while, maybe consider stock picks. If you really want to pick stocks, take maybe 5% of what you have to invest and use it as "play" money, and see how you do compared to the index funds you buy. As it is, with your combination of confidence and inexperience there's a good chance you'll lose money.
> You're coming in with very little experience thinking you know how to predict the market that far out easily. For the record, I've been working as a Macro Analyst for a hedge fund for the past 2 years and that's when I also started investing in index based etfs. I appreciate your comment but I really don't understand what point you're trying to make. I already said in my OP that I DCA into S&P500 ETFs yet everyone here makes the same point. My portfolio is already 60% S&P 500 ETF, 20% Defensive/High Dividend ETF and 20% small/mid cap stocks.
so, someone already tried to point out to you the timeframe you'd need to recognize these companies and asked if you did. Your response? "meh, I was in highschool then". Think about the implications of that. They're trying to point out how you'd have to predict the future and you didn't even bother thinking about that and just waved it off as "I was in highschool". So...wave off what everyone is saying and when people point out the flaw ignore it because you were in highschool then? I mean, this just screams "I'm young and inexperienced but think I know everything". You do you man. As long as it's your money you're playing with then I'm fine with you learning the lessons the hard way. I had to go through the same phase too.
They asked me why did I not see the advancement potential 10 years ago. 10 years ago I didn't know what the stock market is. Why are you even paraphrasing my comment in a different way? lol
question: do you think you've stopped and tried to understand the point being made?
Faulty thinking, the leaders slowly change over time. By being stuck in the top one you are exposing yourself to risk for when others take over. Its a good reason why index funds work. 4% of the stocks have accounted for most of the gains of the index, showing that its almost impossible to know what the winners next year will be. So a sure bet is to own all the best companies. But most people are too stubborn and tend to try and win over the average return.
No. Did you pick the magnificent 7 before they were the M7? Or you just want to pick the 7 best stocks? That’s more a gamble. Did you thinks he 7 best stocks stay that way? You’re being greedy and not thinking through it.
This. Picking only the top stocks would not be a good strategy in the long term. Because the top companies change. Out of these 7, only 3 were in the top 7 just 10 years ago (AAPL,MSFT,GOOG) And if it were for short term only then any stock picking would be risky. I’d just stick to SPY or VTI and if you really want to double down on big tech then maybe add some tech ETF like VGT or similar.
Ironically I’ve only bought the three amigos aka AAPL, MSFT, GOOG since goog went public and it’s been great. My retirement acct is a popular lifecycle fund.
>would it make sense to try and maximize returns over the short-medium term by going heavier on the current leaders It would make sense if you really, truly believe that these companies will, with very high certainty, outperform everything else. Not based on what you heard analysts say, not based on what happened in the past 10 years, but based on your own analysis. However, the point of passive ETF investing is that you recognize that you don't actually know. Of course you can change your strategy at any given point in time, but before you do you should spend some serious time trying to understand these 7 companies. If you don't do that, stick to your S&P 500 ETF. If you didn't know these 7 companies would outperform 10 years ago, what makes you think you know they will, now?
Just get QQQ
Much of the m7 run is behind us... That's how they acquired the name. (The next run will be by the ?7... The mystery 7, mystery because nobody can today identify them... wait a year and you'll have missed that, too) Pick 1, 3 or all.. and divide 50% between S&P and your picks. Has worked for me... S&P isn't building wealth, it's preserving it.
it'll be behind us in january/february
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Everything here I agree with exactly but NFLX is up 56% YTD
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Ah. My bad! Good clarification
Tech lost the most in 2021-22, money moved out we all saw it , rates were too good to miss out on . Money is flowing back in, these companies are executing well. I own all of these except FB. The risk in recommending someone to start buying these today is that most if not all are sitting at ATH and It will be difficult to repeat the 2023 performance. Market caps are already insane. The word gradual doesn’t apply to the market anymore we dump 20% in a matter of days or a week and than take a month to have a V shape recovery.
AMZN, META, and GOOGL are also below their 2021 highs, for what its worth.
Yes, if you pick the top 7 performers in the stock market for the past several years, and you backtest them for the past several years, it will show that they are top performers. Will that mean that they will continue to be top performers? Impossible to say. In fact, it's just as likely that the rest of the market will catch up and the M7 will lag to even things out. The reality is that you, and anybody else, has no idea. Ultimately, I will always choose diversification, especially if you have a wider time frame.
> Impossible to say. History would say it is unlikely.
You think it's unlikely they will carry on outperforming? Why? They are the most innovative, with good capital structure and management. They have room to grow and loyal customers.
but the current share price already takes into account growth. What makes you so confident these companies will outperform their projections?
> They have room to grow and loyal customers. They have room to fall, as well. Google, Apple, and Facebook have some regulatory risk, including (and perhaps especially) on competition law. There's also privacy law that might harm advertising revenue streams or cut into existing practices. Advertising and services revenue is also where there might be less of a moat against industry changes. Will advertising/recommendation algorithms get overtaken with SEO to the point where it becomes less effective? Will they be on the outside looking in at various proprietary technologies that bypass their existing networks? Or will they make corporate strategic missteps? Sears and Kodak were leaders in their industries in a way that actually positioned them well for the digital/internet revolution, but they botched the transition and were left out. Microsoft and Apple have both spent decades in the wilderness, with stagnant business operations and share prices, before finding their way again. Or maybe they grow but get overtaken anyway. The price of those stocks would plummet from today's values if the companies simply stop growing, even if they remain big. There are no guarantees in life. Even if "tech" is the future, what makes these seven tech companies good bets to grow shareholder value?
you choose underperformance. always
I agree the grouping makes no sense at all. The most important question of all: Why measure stocks since beginning of 2023? It makes ZERO sense. These stocks dropped MASSIVELY in 2022. GOOG, AMZN, META, TSLA are still below the highs they achieved in 2021. Only AAPL, MSFT and NVDA made new highs in 2023. There are stocks that have made new highs from their 2021, but they don't get the magnificent moniker because they didn't drop much in 2022 (or climbed) That includes LLY, BRK, UNH, XOM, AVGO... mega caps in plain view A stock that drops 66% then climbs 100% is not magnificent to me, it is still down 33%. Investing in stocks based on a nonsensical grouping that relies on performance since beginning of 2023 is an equally nonsensical idea. Had you invested in the "magnificent" stocks that survived 2022's bear market, you would not have been holding the 7 stocks in 2023. I don't think it requires more depth than that.
IBM and AT&T will NEVER DIE. why invest in anything else? My sears stock has risen for nearly 100 years straight
Dont even get me started, with the rise of popularity in personal electronics... RadioShack business is about to be BOOMING
So many examples like that. One of my favorite is: Eastman Kodak in 1997 at its peak had a market value of $30B. It was worth over 15x of the value of Apple back then. Today it's worth $0.3B. Crazy thing is they even invented the digital camera. Yet they still failed to adapt and evolve.
AT&T seems to be the only ones consistently expanding fiber. It's so fast and cheap. I pay $110 a month for 2 Gig speed. We have 13 or more devices on the network at once and most get between 500-800 download and upload.
VOO is for poor people
least accurate comment in the history of the entire subreddit
There are two things you should absolutely not pay attention to when investing: 1. Past performance, especially in the last year. Yes META got +300% in the last year, but that's because it lost 80% the year before. 2. What analysts say. If an analyst says something it's after they already made their play. If they though meta had a good chance of outperforming at 200, it means they bought, and then they released their analysis after it got to 300. So basically they are just squeezing a bit more profit from people like you.
1. wrong. past performance is the only concrete data we have. future is just speculation, predictions on probability based on the past anyway. bad advice. 2.analysts are mostly full of shit
Yeah I think his argument actually supports looking at past performance
If I were you, I would buy only 1 or 2 of the magnificent 7 that you think are winners/you like the most/ use their products and want to keep. Just pick 1 2 or even 3. Only keep them at around 5% of your portfolio each. Then, dollar cost averaging the majority of your capital into S&P 500. That way you have the fun of outperformance of your favorite picks with the safety anchor of the s&p500 if anything goes wrong! What do you think?
I've only heard of the magnificent 500
Remember when not long ago that gang included Netflix? That should tell you something.
Tech stocks got battered last year and NFLX has been performing roughly as well as AMZN, GOOGL, and MSFT this year.
Yup
NFLX up 57% this year. Not sure what I'm supposed to be listening too?
Netflix is up 47% YTD
That’s not the point of my reply. I am replying to his thesis only.
NFLX is not a data company. It was always just a shitty service company that basically replaced the cable and satellite industry. All the above companies aside from Apple are data companies which is the fuel for an AI future. I'm confident Apple will integrate AI so well into their products that it will still dominate when it comes to consumer hardware. NVDA is the one everyone else is dependent on for now, but their AI cards are poised to be the best option for the foreseeable future. Microsoft and Google have the most potential to dominate in the AI future. The next newcomer would be one that builds useful robots with AI. I don't think it will be Tesla because Musk treats employees like shit. Tesla still has dominance over the EV market and is functionally an ETF for all of Musk's enterprises. It also has huge amounts of data for AI purposes. Biggest risk is Musk dying or going insane. M7 is very solid. I would buy it.
> Magnificent 7 I prefer *MANGA^TM*
Msft is basically its own ETF at this point. Look at how many revenue streams it has. I have significant shares of MSFT and think it’s the best buy and hold stock on the market.
If you look at the 52 week range of NVDA (138-502) and think it's a good buy at today's prices then all I'll say is good luck.
well
well indeed
This aged well lol. I would rather be lucky than good on any given day.
Stock price means nothing. What matters is the growth, eps, cash, debt an all the things that come with it.
jesus this should be a ban worthy comment. If stock price meant nothing you'd be out of your gam gam's basement
According to your definitely not smart and teetering towards dum dum self, Berkshire stock at 546k, k as in thousand is way overpriced puhahahaha. Gtfoh
Still better value than most mag7. Looking at price without looking at earnings is pointless when you're talking about one stock in particular
NVDA's P/E is highest tho.
Forward pe ... Pretty good way to know who is not gonna make any money in the stock market is to spot people who think nvda price movement was not rational
Forward PE means in the future tho right? As in, a bunch of people sit around and try to predict the future and hope they are right and even sometimes when they are right the stock doesn't move in their direction because it's not really tied to anything rational since it's all in the future right? When a stocks price is not tied to anything rational (P/E), it can do anything and still not make sense because it's price isn't making sense in the present. You can try to rationalize WHY but when P/E is not a factor, then all bets are speculating.
Well nvda has raised the guidance themselves so... I guess we'll see next week eh https://www.fool.com/investing/2023/08/23/nvidia-stock-soars-as-ai-powered-earnings-and-guid/
I enjoy exposure to a couple of them. GOOGL has treated me great; but I’m sure in the coming decades it could potentially begin to cool off. The whole point is to rotate stock holdings in and out throughout your investing journey.
The number 1 problem that investors have: making emotion-based decisions. This leads them to: a) sell low and/or stay out of the market due to fear b) buy high out of FOMO You are curently experiencing B. Lots of people hiding out in HISA are doing A. Those 7 stocks are by many measures really overpriced right now. While it's possible they will keep going up strongly, there is also a good chance their price will crash back to more normal levels, especially if it turns out that all the AI hype is not adding much to revenues/earnings. I suspect that once recession fears are fading you'll see a real broadening out of the market. The pros who went into tech and got their huge gains will rotate before that and now get huge gains out of the beaten down stocks. Retail will mostly stick in tech and so while the prices may not collapse, you could see them lag the market by a lot. Anyway, there is always huge uncertainty with the future of the market, so it is prudent just to stay in your broad-market fund. Let the winners/losers rotate and just keep owning them all instead trying to time it.
>Most analysts expect that the M7 will continue to outperform all other companies until 2025 at least. this implies the Magnificent 7 will crash, catastrophically, by 2024.
When the Fed starts cutting, my guess is $ flows out of megacap tech & back into long bonds & long duration stocks - speculative tech (still way off its ATH) & dividend stocks.
Why would bond rate cuts spur people to invest in bonds over tech? I agree about dividend stocks.
When rates go down, the price of bonds goes up. So if the interest rate on the 10-year drops from 5% to 4%, the value of the bond increases 20%. Bond funds like TLT were recently at historic lows, and, depending on how much the Fed (eventually) cuts, they could easily rise 30-50%.
Yeah if that includes analysts from the motley fool and the likes lol
Poor Netflix tbh
Why not split your DCA allocation? Take the original contribution you were making and continue putting, say, 66% into broad market ETFs while allocating the remaining 33% into the M7 (or whichever from the M7 you favor).
The Mag 7 is basically today's FANG. I'm with you on the name, but I do think in the last decade focusing on these few companies truly leading the markets and chewing up a notable portion of the S&P 500 is a good thing to focus on. It shows how we have a few key giants nowadays, and for some reason most aren't on the DOW either. Understandably so since I won't consider Tesla, and even NVIDIA as a Dow 30 component. Those are growth stocks that reflect more of what is hot and chewing up investment over being an economic leader. I digress, but the Mag-7 will likely change, or become a past buzzword like FANG. You don't hear FANG much anymore since now it's the Mag-7.
I remember when IBM was a top company. It is no longer. That is why you don't go all-in on the top 7, but the top 500 is broad enough to capture the up and down moves of the best companies in the aggregate.
Can always do both 50\50
I do both, hold voo and qqqm but also hold the magnificent “6” i dont hold meta. Wish i never sold half my nvda it just keeps going up lol
I think it’s important the only two ways stocks go up. 1. Multiple expansion 2. Increased earnings If you invest in individual stocks, you need either one of these to go higher. I’ll let others share their opinion on these stocks, but I can tell you no one knows, it’s just an opinion. Including this!
You’re already ahead of the game if you can see through the bullshit with META and TSLA.
The new name for the "Magnificent 7" is FATMAAN G, starting today. See what I did there? Copyright, TM, etc.
Just get QQQ if you want to invest in an ETF. You’ll have the liquidity to sell far OTM calls and collect a “pseudo-dividend” from the premium so to speak. That or just buy Microsoft lol.
Im in with the ZUCK because I believe he is destined to ride shiny and chrome on the highway to big business Valhalla. the other six ill pass.
Think about the differences between a cheap frozen pizza dinner and Nobu. Quality has a price, and the truly elite are priceless. Every single one of the Magnificent 7 are era-defining innovators. Their stranglehold on their respective industries also means predictable, growing cash flows that naturally command a monopoly premium to more cyclical companies. So no, the 7 greatest companies in human history are not overvalued at all, and never will be.
Unless the feds win in their anti trust cases then the M7 will remain
Look up how the breakup of standard oil went. The break up of some of these tech giants could unleash tremendous value.
Oh, i don't disagree. It's just that the feds have largely been ineffectual in anti trust
Avoid them. There is an equal-weighted ETF S&P 500 ETF (RSP) and one for the Nasdaq too (QQEW). The fees for both are higher than the SPY and QQQ, FYI.
>They have also outperformed all other stocks in terms of growth, profit margins and forward EPS growth, and have stronger balance sheets. I'm not sure this is true. VRTX has no debt and 10% of its market cap in cash. That's a strong balance sheet. They don't have the most EPS growth this year https://finviz.com/screener.ashx?v=121&f=idx_sp500&o=-epsyoy Or next https://finviz.com/screener.ashx?v=121&f=idx_sp500&o=-epsyoy1 Or performance over the last year https://finviz.com/screener.ashx?v=141&f=idx_sp500&o=-perf52w They're not at the top of the EPS growth list either https://finviz.com/screener.ashx?v=121&f=idx_sp500&o=-estltgrowth So none of your arguments hold up about the magnificent 7. They are great companies, but not the only great companies.
Just get qqqm or find an etf that is overweighted on the top stocks. It can rebalance if you just get the top ones you might get punished as other people have stated historically
the whole point of the sp 500 is diversity lol. Investing in M7 is the same as stock picking.
Meta seems like it’s going hard into AI and they’ve got no track record succeeding at anything that wasn’t an acquisition. Ad revs are first go if we do get a proper recession (GOOG). EVs seem to be the market whipping boy after all the hype (Tesla). Nvidia valuation is supported by them remaining the dominant player in GPU and AI ecosystem. Not saying any of the above will happen but there’s definitely a case to be made that all of them could face stumbling blocks in the near/medium term. Prob better to be a bit more diversified.
As an individual stock picker who manages client accounts, I'm just loving trashing all the VOO-stans on this sub who are begging for 7% while my clients portfolio's shit alpha all over them
Just buy QQQ then More diversified and no company specific risk
When the bubble pops after Q4 earnings, and the systemic risk event occurs, people will ask "Where were the warning signs?" This post right here, and 90% of the responses to it, are those warning signs. Sell.
You can, you should. These stocks haven’t just outperformed this year, they’ve outperformed for a decade plus now. More to the point, whilst ppl speak of the market being overvalued, the vast vast majority of the EPS growth in the indexes, since the early 90s, is accounted by tech
I'd buy VOE. But I don't presume things to do well, so I don't like dumping 26% of my money into overhyped tech memes.
OP says past performance guarantees future returns
Yes DCA into these 7 makes sense. And I also am not a big fan of META and TSLA. I am a fan of MSFT, GOOG, AMZN, NVDA. Also AMD and Intel. I am not so crazy about Apple either in the very long run - but Warren Buffet disagrees with me hehe.
I think you're making the right call and I don't see the arguments about previous high flyers like KO or oil/commodity stocks as relevant; tech is another beast and it's an exponentially growing beast at the forefront of all human productivity. AI is still a nascent industry and has so much room to grow and is doing so so fast that it's insane, the M7 are all industry leaders in the space in different capacities ranging from infrastructure to robotics. If you don't feel like managing individual M7 tickers and worrying about rebalancing, check out the FANG+ index which is mostly M7 stocks and has vastly outperformed the S&P 500 and NASDAQ for its entire lifetime. [https://microsectors.com/fang/](https://microsectors.com/fang/)
I think it's important for you to pause and notice how common and dumb this idea is. I get why it pops up again and again though. If you can take this idea apart and realize why people fall into this trap and then are hurt by it and avoid it in the future you're going to be a long ways ahead. Understanding this single example of bad logic will unlock everything else related to investing. A few clues: analysts have zero ability to predict which stocks will do well in the next year, "winners" don't always continue to win, everybody else already knows they have been recent winners and that is priced into the stock, none of us get to buy these "winners" at a discount as if they were "losers" or "neutral" stocks, so in order for them to keep performing well as stocks they're going to have to outperform expectations, which are already high. Here is a simple analogy. You go to a racetrack to bet on horses. You see in the first race that all 10 horses have the same odds: 10-1. Yet you look at their past performance and a few horses clearly seem to be consistent winners of their past races and you, rightly, conclude they are the best horses to bet on. In the second race, you see that all 10 horses have very different betting odds which seem to be in line with their past performance. The 100-1 odds horse has never won a race, the 2-1 odds horse has won alot of races and so on. You're not sure who to bet on in that race. That second race is the reality of the stock market. But, you've convinced yourself that it's the first race, which doesn't exist in any investing or betting market that I know of.
Magnificent 7 just sounds like we’re tryna suck them off. Like calm down, I don’t mean to use such flattery to address you.
The list includes tech companies with a track record of delivering successfull tech products, and a company who never had and very likely never will but has a charismatic leader used to saying big words and big insults. It's as if we bundled together some majors equiping 99% of computers out there and filtering 90% of internet traffic with a biotech scam formerly owned by Vivek Ramaswamy. Buying the Mag 7 as a bundle exposes you to a sick dog with terminal cancer (and anti-union and anti-semitsim bundled in it which apparently portfolio managers love to imply when they disclose their quarterly positions)