Only fools believe stock surge is just the ‘Magnificent 7’ —  It’s not

Current mythology claims “just a handful of stocks” took the S&P 500 to new highs. Supposedly AI hype driving the “Magnificent 7” Tech stocks in a 2000-era bubblicious redux. Wrong. That just grasps at straws to dismiss the bull market so few foresaw. No, this bull market is a magnificently broad celebration of normalcy’s return. That so few fathom that means it has far further to run. Let me show you.

Sure, the Magnificent 7 boomed. That much is true. Alphabet (Google’s parent), Amazon, Apple, Meta (Facebook’s parent), Microsoft, Nvidia and Tesla—raced like Secretariat since 2022’s bear market bottom. And all but Tesla are Tech or Tech-like with AI exposure.

But every bull market has leaders and laggards. Normally, categories of stocks falling the most in a bear market bounce biggest early in the next bull. Guess what? Tech and Tech-like stocks led 2022’s decline downward. Tech’s big bounce since—which isn’t limited to the Magnificent 7—shouldn’t surprise.

But it’s not just Tech. How to know that? Look where Tech isn’t The Magnificent 7 are US-based, part of America’s hugely and globally outsized 30% Tech weight.  But tech sparse overseas markets are soaring with industrials, financials–even utilities…but almost no tech. In local currencies to avoid skew, markets hitting total return all-time highs this year include:  Australia’s ASX 200, Britain’s FTSE 100, the MSCI Denmark, France’s CAC 40, Germany’s DAX, the MSCI India, Ireland’s ISEQ, Italy’s MIB, Japan’s TOPIX, Netherland’s AEX and Spain’s IBEX. All! Repeat, all! Just the Magnificent 7? Got it? Magnitudes vary, but this magnificent market, while not everywhere, is significantly global and far broader than fantasized.  

Or consider simply: In 2023, nearly 75% of the MSCI World’s more than 1,400 stocks rose. Fully 548 outperformed the World’s 23.8% return! How wiseacre pundits morph that into some seven-stock, bubble-like myth is a prime lesson in “The Pessimism of Disbelief.“

Sir John Templeton famously said, “Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.” Naysayers seemingly think we fast flipped from pessimism to euphoria. Remember 2000’s bubble? Or, even 2021’s slight froth? IPOs flooded the late 1990’s markets.  Myriad SPAC offering dotted 2021. This is natural: Euphoria means firm founders and owners crave gorging at the IPO dessert buffet. Where are the IPOs now? Nowhere. (As I coined decades ago, IPO really means, “It’s Probably Overpriced.)