Fisher Investments Reviews its Outlook for the "Magnificent Seven".

Summary

In 2024, the 'Magnificent Seven' tech stocks have dominated market performance, outpacing both value stocks and smaller companies. While growth stocks, particularly in tech, have driven the bull market, they have been more volatile—leading during market rallies and lagging in downturns. Despite this volatility, the speaker expresses cautious optimism about continued strong performance from these stocks, acknowledging that market trends are directional but uncertain. Overall, the analysis highlights the leadership role of growth stocks, especially the Magnificent Seven, in shaping market dynamics, with a focus on tech's pivotal influence in both positive and negative market movements.

Takeaways

• 😀 The term 'Magnificent Seven' refers to seven growth-oriented, large-cap stocks that have dominated discussions in 2024.
• 😀 The speaker challenges the concept of the Magnificent Seven, suggesting that the broader bull market has been driven by growth stocks overall, not just these seven.
• 😀 While large tech stocks, particularly in Communication Services (e.g., Meta), have led the charge, the bull market has been much more inclusive than just these few stocks.
• 😀 Growth stocks have generally outperformed value stocks during the bull market, although value stocks have started to catch up in 2024.
• 😀 The speaker notes that growth stocks, including the Magnificent Seven, tend to outperform when the market is up, but also underperform more significantly when the market declines.
• 😀 Tech stocks and the Magnificent Seven are more volatile, with larger movements than the broader market, both in up and down markets.
• 😀 The speaker expresses optimism about the future performance of the Magnificent Seven, based on broader market trends, but emphasizes that no investment is certain.
• 😀 Growth stocks, particularly tech stocks, have demonstrated a trend of outperforming during market rallies and underperforming during declines, but this is not always guaranteed on every day.
• 😀 The speaker views the market as a probabilities game, suggesting that while predictions are not certain, there are clear patterns in market movements.
• 😀 The video encourages viewers to subscribe for more insights and updates on the market, underlining the importance of staying informed on current trends and market behavior.

Q & A

What are the 'Magnificent Seven' stocks discussed in the video?

The 'Magnificent Seven' refers to seven prominent growth stocks, mostly in the tech sector, that have been leading the market in 2024. These stocks include major companies like Meta and other tech giants, often grouped together due to their significant impact on the market.

Why does the speaker consider the 'Magnificent Seven' a 'nonsense notion'?

The speaker argues that the idea of focusing on just seven growth stocks is misleading. He believes that the bull market in 2024 has been much broader, with growth stocks as a whole, not just the Magnificent Seven, outperforming value stocks. He also points out that small-cap stocks have not been leading the market, contrary to what some might expect.

How has the broader bull market in 2024 behaved according to the speaker?

The speaker emphasizes that the 2024 bull market has been broader than many people realize. While large tech stocks have led the way, the overall market has favored growth stocks over value stocks. He notes that growth stocks, especially in tech, have generally outperformed other sectors.

What is the speaker's view on value stocks in 2024?

Although growth stocks have outperformed value stocks for most of 2024, the speaker acknowledges that value stocks have started to catch up recently. However, he still sees growth as the dominant force in the market.

How does the performance of growth stocks compare to the overall market performance on a daily basis?

According to the speaker, growth stocks tend to amplify the daily movements of the market. On days when the market is up by 1%, growth stocks, particularly the Magnificent Seven, are likely to rise even more. Conversely, when the market is down by 1%, these stocks typically decline more than the broader market.

What does the speaker mean by stating that the market's movements are 'directional'?

The speaker uses the term 'directional' to indicate that the performance of growth stocks, including the Magnificent Seven, generally follows the broader market trend. When the market rises, growth stocks tend to outperform; when the market falls, they tend to underperform, though the exact day-to-day movements can vary.

What is the speaker’s outlook for the Magnificent Seven and the tech sector going forward?

The speaker is optimistic about the future of the Magnificent Seven and the tech sector, predicting that they will continue to perform well as long as the market stays on an upward trajectory. However, he acknowledges that this is not a certainty, as markets are inherently uncertain and driven by probabilities.

What role does the Nasdaq play in the context of growth stocks discussed?

The Nasdaq is mentioned as a broader index that includes many growth stocks, especially in tech. The speaker points out that the Nasdaq’s performance has generally mirrored the trends of individual tech stocks, especially the Magnificent Seven, which have led the charge in terms of growth and market influence.

What is the significance of the daily market movements mentioned by the speaker?

The daily market movements highlight how the performance of growth stocks, especially the Magnificent Seven, tends to amplify the market’s direction. Small daily fluctuations in the market often result in more significant moves for these stocks, making them a key indicator of broader market trends.

What does the speaker mean when he says investing is a 'probabilities game'?

The speaker suggests that investing is not about certainty but about assessing probabilities. While he believes that growth stocks and the Magnificent Seven will likely continue to do well, he admits that there are no guarantees and that market outcomes are inherently uncertain.