Magnificent Seven Stocks

[CatinKS]

I find this interesting because trying to decide which way the market will travel this election year. If similar information has already been posted feel free to delete mods. I jumped out of the equities in mid-summer and have 70% of my retirement in CD's or Treasuries. Not looking for advice just opinions. Realize there is a majority of investors on this site that are hold equities until the sun stops shinning, but market timing is easier now with higher CD rates. Looking forward to the long in tooth investors telling me if I need to buy now. Please read the following before responding. Thanks.

https://www.morningstar.com/news/marketwatch/20231018319/7-stocks-are-holding-up-the-us-market-here-is-why-they-may-soon-fall-back-to-earth

 

[Al18]

Your investing strategy seems more like gambling. Based on your post, you just missed a 7.2% rise in the SP500 according to https://www.early-retirement.org/forums/f28/s-and-p-500-discussion-119909.html

 

[CatinKS]

My index equities return 9 1/2% in 7 months and 5% when converted this summer to CD's . Not here to discuss past performance, but thoughts going forward as the equities are driven by only 7 stocks. The index funds are influenced by such a small group of stocks, does this make it more risky than most investor who invest in index funds expect?

 

[FLSUnFIRE]

I've never had any luck timing markets... EVERY time (slow learner perhaps but I eventually learn) I tried I missed out on gains before I got back in.



70% is not the Magnificent 7 and I am about 50/50 large cap (C fund and VTIAX) and small cap index too that reduces their impact to me if they collapse as their closer to 15% of my diversified equity portfolio. Personally, I think the valuations are a bit crazy but what do I know....

 

[Gumby]

My index equities return 9 1/2% in 7 months and 5% when converted this summer to CD's . Not here to discuss past performance, but thoughts going forward as the equities are driven by only 7 stocks. The index funds are influenced by such a small group of stocks, does this make it more risky than most investor who invest in index funds expect?

The purpose of this subforum is to discuss active investing, not to debate individual stock picking versus index funds.

 

[DrRoy]

No predictions. Your odds on being right for two 50% guesses (get out, get back in) are only 25%.

 

[target2019]

I find this interesting because trying to decide which way the market will travel this election year. If similar information has already been posted feel free to delete mods. I jumped out of the equities in mid-summer and have 70% of my retirement in CD's or Treasuries. Not looking for advice just opinions. Realize there is a majority of investors on this site that are hold equities until the sun stops shinning, but market timing is easier now with higher CD rates. Looking forward to the long in tooth investors telling me if I need to buy now. Please read the following before responding. Thanks.

https://www.morningstar.com/news/marketwatch/20231018319/7-stocks-are-holding-up-the-us-market-here-is-why-they-may-soon-fall-back-to-earth

The article is over a month long. Here is what has happened in the last month. https://finviz.com/map.ashx?t=sec&st=w4

You can see the larger companies clearly, and their NAV's have continued upward.

I think what you are saying is that you have cash earning 5%, and are wondering whether to buy what?

Do you buy individual companies, an ETF, or maybe rotate back into a total index?

 

[Lsbcal]

What is not well understood is that even well planned market timing will have many whipsaws that usually will outnumber the good trades. But when the good trades generally payoff is during really nasty recessions. A good system will have an overall good return over several years and provide insurance against a disastrous portfolio drawdown in retirement. It will easily beat Treasuries.

Here is one market timing example:
1) you trade based on a 12 month moving average of the SP500
2) sell when the moving average gets to within 1% of the current SP500
3) buy back when the moving average rises 2.5% above the current SP500
4) only do these trades at the end of each month based on end-of-month data

Results for 1950 through now:
Compound return of 12.1% versus 10.8% for buy-hold of the SP500
BUT...
good trades = 12
bad trades = 25
worst whipsaw = -13%
average whipsaw = -5%

Note: I do not use this system but it is a good example of what you will go through and how much patience you will have to have when the market goes against such a simple trading scheme.

 

[Badger]

Not looking for advice just opinions. Realize there is a majority of investors on this site that are hold equities until the sun stops shinning, but market timing is easier now with higher CD rates. Looking forward to the long in tooth investors telling me if I need to buy now. Please read the following before responding. Thanks.

One of those is asking opinions and the other is advice. My opinion is you are market timing and that is not a good idea. I did that once when I first started in investing. Unfortunately I lost but fortunately not much money and I learned a valuable lesson. I never tried that again.
I don't give advice when I don't have all the information and even then probably won't. Best of luck to you.

Cheers!

 

[SunGuy]

Their best years are behind them %-wise. Most retirement funds are overweight them too. Small/micro/nano caps are the way to go for the future for individual stocks.

 

[Dean56]

One of those is asking opinions and the other is advice. My opinion is you are market timing and that is not a good idea. I did that once when I first started in investing. Unfortunately I lost but fortunately not much money and I learned a valuable lesson. I never tried that again.
I don't give advice when I don't have all the information and even then probably won't. Best of luck to you.

Cheers!

I agree 100%

I have stayed invested in the market thru ups & downs and it has worked out well. I feel trying to time the market is a losing strategy.

 

[thefist]

Please enlighten us as to why now is easier to market time.

If you want to market time, perhaps do that with some play money, like 10% of your equity allocation. By being out of equities now, you’ve missed some big gains lately.

 

[SunGuy]

Microsoft is a money printing machine, if I could only buy one stock for the rest of my life, it would probably be MSFT.

I expect it to be the top company coming out of the recession, and the first to hit $10 trillion market cap.

A forecast I saw showed this:
"Microsoft price will hit $4XX by the end of 2023 and then $6XX by the end of 2025. Microsoft will rise to $7XX within the year of 2027, $8XX in 2029, $9XX in 2031 and $1XXX in 2034."

Their sankey chart is so sexy lol.

 

[Al18]

MSFT stock was $329 at the beginning of 2022 and had dropped to $239 at the beginning of 2023. Way to risky for my taste - do not own any directly.

 

[aja8888]

Microsoft is a money printing machine, if I could only buy one stock for the rest of my life, it would probably be MSFT.

I expect it to be the top company coming out of the recession, and the first to hit $10 trillion market cap.

A forecast I saw showed this:
"Microsoft price will hit $4XX by the end of 2023 and then $6XX by the end of 2025. Microsoft will rise to $7XX within the year of 2027, $8XX in 2029, $9XX in 2031 and $1XXX in 2034."

Their sankey chart is so sexy lol.

Somebody said that about Tesla a while back (hit $4,000/share). It's not going that well for them.

 

[Dash man]

MSFT stock was $329 at the beginning of 2022 and had dropped to $239 at the beginning of 2023. Way to risky for my taste - do not own any directly.

That’s too short of a time frame when investing in individual stocks. I’ve owned MSFT since 2005, LLY since 2011 and AVGO since 2013. I’ve done extremely well.

 

[Markola]

I heard one investor explain that the Magnificent 7 are the digital monopolies. Another investor explained that these are the companies that are positioning themselves to profit the most from AI. All I know for sure is, Netflix was part of the elite FAANGs group recently but isn’t mentioned much anymore. I’d never heard of Nvidia until this year. The only certain answer to your question is, “we’ll find out.”

 

[target2019]

From the article, the big 7 are: Apple Inc. (AAPL), Microsoft Corp. (MSFT), Google owner Alphabet Inc. (GOOGL) (GOOG), Tesla Inc. (TSLA), Amazon.com Inc. (AMZN), Facebook owner Meta Platforms Inc. (META) and chipmaker and artificial-intelligence darling Nvidia Corp (NVDA).

I think of these companies riding the crest of tech innovation. Somewhere below these 7 are companies which will rise to the top 10, but who knows when?

S&P 500 ETF Components https://www.slickcharts.com/sp500

NFLX is a good example of what happens when your moat is challenged and grows narrower. Other streamers have stepped up their game, offered lower prices (at least for awhile). Still, NFLX is top 30.

NVDA is a good example of what happens when your product development outdistances others. My 10-year old Dell has an NVDA graphics card. Now they are top choice for many new applications like AI.

 

[Alex The Great]

Microsoft is a money printing machine, if I could only buy one stock for the rest of my life, it would probably be MSFT.
Their sankey chart is so sexy lol.

I own a little bit of MSFT shares but I would not consider it as a safe investment. May be I'm too old and still remember the troubles this company went through a decade ago?

 

[5Miler]

DGF owns a bit of Microsoft as well. She bought 71 shares in 1994 in her after tax account with a cost basis now of $11.01 per share. She bought an additional 42 shares in her Roth account in 1999 with a cost basis of $41 which I have been slowly liquidating to play the ACA game until Medicare next July. Numerous stock splits.

Despite the long period of doldrums Microsoft experienced after 2000, buying and holding has been effective. It would have been even better if only her dividend reinvestment had not been halted when she moved everything to Fidelity years ago. I only discovered it when I went to stop it to better control taxable income after she retired.

DGF will not sell it from her after tax account although I have often tried to get her to diversify. While she has several hundred $K invested in it now, fortunately it would not derail her retirement in the least if it suddenly disappeared.