Which 4 Stocks Account for 70% of the S&P 500's Gains

NASDAQ: MSFT | Microsoft Corporation News, Ratings, and Charts

MSFT – Over the past 52-week 4 stocks have accounted for nearly 70% of the S&P 500 Index’s 37% gain.

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!

 

President Trump had a field day noting that the new trillionaire club of stocks, “Microsoft (MSFT)”, “Amazon (AMZN)”,  “Google (GOOGL)” and “Apple (AAPL)” spells out MAGA. 

Indeed, this new acronym has supplanted the old FANG gang, with Microsoft and Apple replacing “Facebook (FB)” and “Netflix (NFLX)” for good reason; the former, which can both be considered old guard tech from pre-dot.om days, have gained whopping 85% and 120% in just the past 52 weeks while the latter have only eked out 20% and 13% gains over the same period. 

The impact has not been just psychological but has had very real, and some would say unhealthy, impact on investor behavior and stock market performance. 

Over the past 52-week MAGA has accounted for nearly 70% of the S&P 500 Index’s 37% gain.  And an eye popping 76% for the Nasdaq 100. 

The market is getting increasingly top heavy with the top 2, 5 and 10 largest capitalization stocks now accounting for record representation of the overall market—the top 5 of the S&P 500 Index is now near 18%, a decade high. 

As you can see, over the last decade the FAAMG stocks have increased their share of the S&P 500 from 7% to 17%.  These tech giants, which used to be valued at $650 billion in 2010, are now worth nearly $5 trillion, or 7.6x more.  Over this same time period, the S&P 500 increased in value from $9 trillion to $29 trillion, or only 3.1x more.

And the trend seems to be accelerating as confluence of a ‘winner take all’ economy, especially in tech where scale matters most, meets an investing environment dominated by passive index based ETFs.  

Unlike a portfolio of individual stocks and bonds, in which if one portion grows to large it needs to be shaved and rebalanced, the growth of MAGA creates a self-fulling feedback loop in which more money needs to be allocated to these behemoths.

Could this continue for the next 1, 2 or 3 years or more? Sure.  But ultimately it is not healthy for the market or one that is likely to lead to a truly sustainable bull market. 

Just as there is much hand wringing of the growing economic inequality in society with wealth increasingly amassed into a shrinking group, I too am worried that such a top heavy stock market will ultimately topple.  

It would be nice, nay great, if we could see a broader and wider participation in this record bull run. 

 


MSFT shares were trading at $183.90 per share on Wednesday afternoon, down $0.54 (-0.29%). Year-to-date, MSFT has gained 16.61%, versus a 4.71% rise in the benchmark S&P 500 index during the same period.


About the Author: Steve Smith


Steve has more than 30 years of investment experience with an expertise in options trading. He’s written for TheStreet.com, Minyanville and currently for Option Sensei. Learn more about Steve’s background, along with links to his most recent articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
MSFTGet RatingGet RatingGet Rating
AMZNGet RatingGet RatingGet Rating
GOOGLGet RatingGet RatingGet Rating
AAPLGet RatingGet RatingGet Rating
FBGet RatingGet RatingGet Rating
NFLXGet RatingGet RatingGet Rating

Get Free Updates

Join thousands of investors who get the latest news, insights and top rated picks from StockNews.com!


Top Stories on StockNews.com

NYSE: SPY | SPDR S&P 500 News, Ratings, and Charts

Is This “REALLY” a Bull Market?

Few people have pounded the table harder that this is a bear market. Yet the size and length of this rally for the S&P (SPY) does make one contemplate all the possibilities. Read on for a detailed review of where we stand now and what is likely next for stocks.
NYSE: TSM | Taiwan Semiconductor Manufacturing Company Ltd. News, Ratings, and Charts

3 Semiconductor Stocks Set To Rise

The shift to remote work has resulted in increased demand for semiconductors. Taiwan Semiconductor (TSM), ASML (ASML), and Broadcom (AVGO are set to soar.
NASDAQ: AMGN | Amgen Inc. News, Ratings, and Charts

3 Top Biotech Stocks for July

The biotech sector is one of the obvious winners of the coronavirus. Amgen (AMGN), Vertex (VRTX), and Seattle Genetics (SGEN) are the top stock picks for July.
NASDAQ: TSLA | Tesla, Inc. News, Ratings, and Charts

3 Stocks That Are Up More Than 100% This Year

Tesla (TSLA), Zoom (ZM) and Shopify (SHOP) are flying high this year. Find out what’s driving up their prices.
NYSE: ORCL | Oracle Corporation  News, Ratings, and Charts

4 Dividend Stocks to Buy if There is a Second Market Crash

The coronavirus has yet to subside in the US and there are fears about a second wave. Oracle (ORCL), Eli Lilly (LLY), EBay (EBAY) and CoreSite Realty (COR) are four dividend stocks that could be a smart investment if the market sours again.

Read More Stories


More Microsoft Corporation (MSFT) News View All

Event/DateSymbolNews DetailStart PriceEnd PriceChangePOWR Rating
Loading, please wait...
View All MSFT News