A lesson from a trader: when the hype gets hyperintense, it’s time to sell. From Chris MacIntosh at internationalman.com:
Remember all the media headlines about the Magnificent 7 carrying the stock market from earlier this year?
We’ve touched on the Magnificent 7 in previous issues pointing out that the majority of investors (both retail and professional) are increasingly putting their faith (and money) into just seven stocks. Increasing concentration of risk is what is required for blow off tops. Just saying….
It reminds us of the dot-com era when stocks like CISCO were all the rage.
Except this time around, this concentration blind chasing of just a handful of stocks is now even more severe than in the late 1990’s/early 2000’s.
Actually, it turns out the Magnificent 7 are yesterday’s news. Now, it’s all about “Magnificent 2” as just two stocks — Meta and NVIDIA — are driving most of the “growth” returns. According to Goldman Sachs, “Nvidia is the most important stock on planet earth from an index correlation, factor, and retail momentum perspective.”
