Jan 26, 2024
Magnificent 7 & Tech Stocks – Wealth for Life
AZ TRT S05 EP03 (218) 1-21-2024
What We Learned This Week:
- Magnificent 7 - new hottest tech stocks all should own: FB, APPL, AMZN, NVDA, TSLA, MSFT, GOOG
- FAANG Stocks - *past hot list: FB, Apple, Amazon, Netflix & Google
- Top Tech Stocks were 30% of the S&P Index Weighted Average
- Tech Stocks - AI, Cloud, Chips
- Zombie Co‘s - too much debt service, no growth
- Interest Rates - how this affects stock prices
Co-Host: Denver Nowicz, President - Wealth For Life
https://wealthforlife.net/brt/
https://twitter.com/denvernowicz
Denver is an advisor with nearly 20 years experience working with clients in investments and insurance, designing retirement plans with a combo of both. He takes us through different strategies for clients to get the best allocations for their money over the long term. It is the Combo Strategy of both Offense and Defense, the synergy of the mix, not ‘All or Nothing’.
Notes:
Here are some reference notes for the topics about the market being discussed in this podcast.
Indexes – over the last year
Dow - 38K, up from 33K Jan. 2023 – up 12%
S&P - 4900, up from 4000 Jan. 2023 – up 18%+
NASDAQ – 17.5K, up from 11.9K Jan. 2023 – up 30%+
Top 25 Components by Market Cap by Investopedia
Because the exact weightings of the top 25 components are not available from S&P directly, the weightings below are from the SPDR S&P 500 Trust ETF (SPY). SPY is the oldest exchange-traded fund (ETF) that tracks the S&P 500 and holds $406.6 billion in assets under management (AUM) as of Sept. 20, 2023, and is highly traded.9
As a result, the SPY's portfolio weightings provide a good proxy for investing in the underlying S&P 500 index, although the two may not be exactly the same. As of Sept. 21, 2023, the following are the 25 largest S&P 500 index constituents by weight:
Top10 = est. 30% of S&P
- Apple (AAPL): 7.05%
- Microsoft (MSFT): 6.54%
- Amazon (AMZN): 3.24%
- NVIDIA (NVDA): 2.79%
- Alphabet Class A (GOOGL): 2.13%
- Tesla (TSLA): 1.95%
- Alphabet Class C (GOOG): 1.83%
- Berkshire Hathaway (BRK.B): 1.83%
- Meta (META), formerly Facebook, Class A: 1.81%
- UnitedHealth Group (UNH): 1.28%
Magnificent Seven Stocks Performance – from Investors.com
|
Company Name |
Symbol |
2023 YTD Performance |
|
Alphabet |
(GOOGL) |
+50% |
|
Amazon |
(AMZN) |
+79% |
|
Apple |
(AAPL) |
+52% |
|
Meta Platforms |
(META) |
+178% |
|
Microsoft |
(MSFT) |
+55% |
|
Nvidia |
(NVDA) |
+235% |
|
Tesla |
(TSLA) |
+106% |
Dubbed the Magnificent Seven stocks, Apple, Microsoft, Google parent Alphabet, Amazon.com, Nvidia, Meta Platforms and Tesla lived up to their name in 2023 with big gains. The Magnificent Seven stocks are among the best stocks to buy and watch in the stock market today.s Ali Coram Justin Niel
Due to their outsized market capitalizations, Magnificent Seven stocks hold a disproportionate influence on the market-cap weighted Nasdaq composite and S&P 500 indexes.
What are FAANG Stocks? – from Corporate Finance Institute
FAANG stocks are the publicly traded stocks of U.S. technology giants Facebook, Amazon, Apple, Netflix, and Google. They are among the best-performing technology and most well-known companies in the world.
Currently, the combined market value of FAANG exceeds $3 trillion. It accounts for almost 10% of the U.S. stock market’s total market capitalization of $31 trillion. The price movement of FAANG stocks impacts the entire market, affecting even investors who do not own FAANG stocks.
All the companies are traded on the NASDAQ Stock Market. In addition, the FAANG stocks are part of the S&P 500 Index, which includes the 500 largest publicly-traded companies by market capitalization traded on the NYSE or NASDAQ.
Tech Stock examples by field –
AI Stocks
Nvidia - NVDA
Cisco - CSCO
Arista Networks - ANET
Google - GOOG
Microsoft - MFST
Amazon - AMZN
Cloudfare NET
Broadcom - AVGO
Palantir - PLTR
Chip – Semi Stocks (from money.usnes.com)
|
SEMICONDUCTOR STOCK |
IMPLIED UPSIDE AS OF JAN. 9 CLOSING PRICE |
|
NXP Semiconductors NV (NXPI) |
22.8% |
|
Qualcomm Inc. (QCOM) |
14.4% |
|
Monolithic Power Systems Inc. (MPWR) |
26.3% |
|
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) |
9.9% |
|
Nvidia Corp. (NVDA) |
21.7% |
|
ON Semiconductor Corp. (ON) |
42.8% |
|
Advanced Micro Devices Inc. (AMD) |
8.5% |
Cybersecurity Stocks - via Investors.com
HACK – ETF of Cybersecurity Stocks
Crowdstrike - CRWD
Palo Alto - PANW
Fortinet - FTNT
Zscaler - ZS
Checkpoint - CHKP
Cisco - CSCO
More from Investors.com: HERE
'Zombie' Companies already make up 11.5% of U.S. listed stocks
Provided by Morningstart via Dow Jones
Oct 31, 2023 By Joy Wiltermuth
Investors should brace for more bankruptcies
About 11.5% of listed U.S. stocks already belong to a large network of "zombie" companies that have consistently earned less than they owe in interest costs, according to a tally from Glenmede.
While that might not sound ideal, higher bond yields or a recession could make a potentially ugly situation for investors even worse.
"The combination of rising borrowing costs and heightened recession risks could begin to tip zombie companies into bankruptcy," a team led by Jason Pride, chief of investment strategy and research at Glenmede, wrote in a Tuesday client note.
Stocks, unlike bonds, often are at risk of seeing their entire value wiped out if a company files for bankruptcy. Recessions also tend to shake out smaller and weaker companies with high debt loads, in part because funding from Wall Street can dry up.
The Glenmede strategy team arrived at their zombie figure by looking at the share of companies in the Russell 3000 index RUA whose earnings before interest, taxes, depreciation and amortization didn't meet their interest costs in the past three years.
While off peak levels in the wake of the pandemic, the chart suggests an elevated risk of public U.S. companies vulnerable to collapse.
Dogs of the Dow – from NASDAQ.com
The 2024 Dogs of the Dow
|
STOCK |
DIVIDEND YIELD |
RANK IN 2023 |
|
Walgreens |
7.21% |
4 |
|
Verizon |
7.13% |
1 |
|
3M |
5.52% |
5 |
|
Dow Inc. |
5.03% |
2 |
|
IBM |
4.06% |
6 |
|
Chevron |
3.98% |
9 |
|
Amgen |
3.14% |
7 |
|
Coca-Cola (NYSE: KO) |
3.13% |
- |
|
Cisco Systems |
3.09% |
8 |
|
Johnson & Johnson (NYSE: JNJ) |
3.04% |
- |
Data source: DogsoftheDow.com
The basics of the Dogs of the Dow strategy
Many investors love the Dogs of the Dow because it's so easy to follow. All you have to do is look which 10 stocks among the 30 Dow Jones Industrials components have the highest dividend yield on the last day of the year. Then, invest an equal amount in each of those 10 top-yielding stocks, and hold those investments through the end of the subsequent year.
When the end of the year comes, you can either abandon the Dogs of the Dow strategy entirely, or you can repeat it for the following year. If you choose to stick with the Dogs of the Dow, you'll just need to rebalance to account for relative performance of the 10 stocks, along with replacing any stocks whose yields have fallen below the threshold for Dogs of the Dow eligibility with those whose yields have risen sufficiently to take their place.
More Info on WFL and Tax Free Matching: HERE
Wealth For Life Topic: HERE
Link to Taxes Show on 10/31/2021 w/ Denver: Here
Link to Offense / Defense Show on 6/6/2021 w/ Denver: Here
Link to Shows, Denver was a Guest: Here
Investing Topic: https://brt-show.libsyn.com/category/investing
Tech Topic: HERE
‘Best Of’ Topic: https://brt-show.libsyn.com/category/Best+of+BRT
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