Since the beginning of the year, most of the performance of the S&P 500, a broad stock index, came from seven companies: Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla.
They are called the “Magnificent Seven,” and up until recently, they underpinned most of the growth of the index.
The index rose by about 19% between December 30, 2022 and December 4, 2023.
S&P Capital IQ estimated that without these seven, its performance was quite bleak. The rest of the index delivered just 7.3%.
It’s clear why investors were not as willing to put their money in stocks… when interest rates are running above 5%, making an extra two percentage points isn’t worth the headache.
But in late October, something changed.
The Great Catch-Up
The rest of the stock market started catching up with the high-flying Magnificent Seven.
Between October 27 and December 4, the elite group of seven stocks rose by 11%.
But the rest of the index delivered a 10.8% growth in a little over a month.
In other words, investors have way more options to choose from, and the most recent data tells me that you don’t need to chase Apple or Nvidia to expect outsized returns.
I understand why some investors were reluctant to get back into the markets this year.
They didn’t have too many options, and the best-performing stocks looked too expensive.
Now, the picture has changed. The rest of the market is catching up, and it’s relatively undervalued.
This Is a Stock Picker’s Market
I knew it… this is why, throughout the year, I focused on overlooked stocks, such as homebuilders. One of them delivered a 52% return in a matter of months to my The Signal readers.
As always, the 18.6-year real estate cycle told me what to do… and now the rest of the market has woken up to the same idea.
This rally is no longer about a handful of superstar stocks.
It’s about pretty much every asset out there… just as it should be in this final stage of the 18.6-year cycle.
My readers have been warned about this for months…
Going into 2024, I couldn’t be more excited.
Not only was my analysis correct, but I also have the data now to show you that this rally has become broad.
And it will get even better as the last stage of the cycle unfolds.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson
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