If you watch financial media at all, you've probably heard of the Magnificent 7: Tesla, Apple, Nvidia, Amazon, Google, Facebook, and Microsoft.
These seven stocks have led much of the way for quite some time on the stock market. They have carried the indexes over the last few years. Without them, what would be 20+% years to the upside would turn into mediocre gains.1
Year to date though, they have not been very magnificent. Much of the current pain in the stock market is due to the selloff in that space.
Is this simply a temporary malaise without underlying fundamental problems, or will this reveal a fundamental switch in stock market leadership? Time will tell.
Broad bond indexes have been outperforming them so far in 2025.
This serves as a reminder of the role fixed income can play in a portfolio. Though the inflation of 2022 was ugly all around, bonds can be a buttress when times get tough for the stock market.
Everyone loves it when stocks go up and portfolios soar, but if you can't handle the downside when equities fall, then you may need to reconsider your risk appetite. Saying you're high risk when you are only experiencing reward is not enough. Experiencing loss will reveal your true risk tolerance.
Do you have an investment portfolio you can handle?
Do your friends, coworkers, and family members?
Take our free risk assessment today or share this with someone you care about.
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Sources:
1. Phil Rosen, “The S&P 500 barely moves without the Magnificent 7”, January 6, 2025. Accessed online: https://www.linkedin.com/pulse/sp-500-barely-moves-without-magnificent-7-phil-rosen-vfk3c/