By: Live Oak Private Wealth
“Reaping dependably high returns from risky investments is an oxymoron. But there are times when this caveat is ignored—when people get too comfortable with risk and thus when prices of securities incorporate a premium for bearing risk that is inadequate to compensate for the risk that’s present.”
-Howard Marks
The second quarter of 2024 saw mixed results for the equity markets as strength continued in mega-cap technology companies, while the rest of the market languished. Massive spending on artificial intelligence has sent the Magnificent Seven (Microsoft, Apple, NVDIA, Alphabet, Amazon, Meta, and Tesla) soaring, and they now make up a whopping 32.8% of the S&P 500 index. Despite the lofty valuations in the Magnificent Seven, investors and algorithmic programs are piling in at the expense of the remaining 493 companies where economic growth appears to be slowing. This has resulted in the third narrowest six-month period ever, with only 24% of stocks in the index outperforming the S&P 500 index.
Read our full investment commentary and letter to clients by downloading the 2024 Mid Year letter.