This 3rd Week of December 2021 Thoughts
51% Of All Market Gains Since April Are From Just 5 Stocks-the five most popular tech names - AAPL, MSFT, NVDA, TSLA, GOOGL - have contributed 51% of S&P 500 returns since April. These stocks now make up 22% of the S&P 500.
NASDAQ WOULD HAVE FALLEN 20% IN 2021 WITHOUT ITS 5 BIGGEST STOCKS! AAPL, MSFT, NVDA, TSLA, and GOOGL
This is very sobering, but it explains why stock analysts who build portfolios based on value are so concerned: the gains earned by U.S. equity markets in the last year have been driven by a small number of stocks. The 5 biggest stocks have produced more than 100% of the appreciation seen by the NASDAQ in 2021. Without these 5, the NASDAQ would be down more than 20%. Here is what this looks like…a picture is worth 1,000 words.
The blue line shows you the 2021 return of the NASDAQ. The gold line shows you what the NASDAQ would have earned if you had removed these 5 stocks: Apple, Microsoft, NVIDIA, Tesla and Google. The reality that they are all companies that have technology at the core of their business models. 😲 Ever wonder why you have more stocks than bonds? Why we are sitting in cash and not making a nice dividend? This chart tells you why! A low dividend is better than having a negative return on your low-risk assets!
😲 Why does this matter to you? This chart is important: notice how we have had negative inflation adjusted returns over the last year! It won’t be this way forever, and as I’ve stated, I’m waiting for the 10-yr bond to hit 1.60%-1.75% before I add the first round of my Skye Rising Rate Capsule Portfolio to your accounts. Stay tuned!
I’ve written so much about the Electric Vehicle industry that gotten many questions about the best way to buy into this part of the market. I’ve invested in Magnifi, the “google-of-the-investment-industry” and this program will let us drill into fund holdings to locate the funds with exposure to these sectors: the automakers; the battery-suppliers; the materials critical to battery technology; charging stocks and EV suppliers. Here is a great link with many names for you go follow up on, and a short podcast: let me know if you want to explore this riskier part of the investment scene! https://www.investors.com/news/best-ev-stocks-buy-now-electric-cars/?src=A00220
😲 Why does this matter to you? As a technician, I use charts to help you decide when it is a good time to invest in a stock you have identified. I will never GIVE you the name of a stock to invest in, but I will add your stock to my watch list; send you articles I think will keep you informed, and I’ll let you know when the stock is at a place where we need to take profits, or add more to your position. Please know that when you go off the “main path” and want to add individual stocks to your portfolio, we need to partner to follow it. If you are passionate about a company, I’ll help you find the least risky way to indulge in your passion!