November 2023

Everybody's heard of the S&P 500, but maybe what's more relevant is the S&P 493. We all consider the S&P 500 to be an important benchmark for investing activities. However, the 493 might be more accurate, and that's because there are seven stocks, and we call them the Magnificent Seven that significantly distort this index. You're familiar with these companies, Apple, Microsoft, Amazon, Google, Facebook, or Meta, Tesla, and NVIDIA. I just read yesterday, NVIDIA's chips for AI are selling $40,000 for a little chip. So that's the Magnificent Seven. Valuation wise, they make up 29% of the index, despite only being 1.4% of the 500 stocks, and that's because the S&P 500 index is what's known as a cap weighted index. So the Magnificent Seven make up 29% of the value of the index despite only being 1.4% of the stocks. The larger the company, the greater the influence...

Last week, we enjoyed a great market rally. We enjoyed it, that is, if you weren't timing the market and afraid because of the previous downturn. Friday's hiring report was below expectations, and that's great news. Expectations were 180,000. It actually came in at 150,000 and for perspective, September was a hair under 300,000. What does that mean? That means the economy is beginning to lose steam. After years of being overheated, that's not a bad thing because the slowing economy gives the Fed room to put an end to the rate hikes. Rising interest rates hurt asset values. They hurt home values, they hurt mortgages, they hurt stocks, they even hurt bonds. Sure enough, last week, the S&P rose almost 6%. It's the strongest rally since November 2022. Moreover, yields on various bond durations dropped a little bit. Fortunately, we've already been moving out on the yield curve, so...