The Rise of Magnificent Seven Stocks: Concerns and Market Concentration

The rise of the 'Magnificent Seven' stocks has garnered substantial interest, but it has also raised concerns about market concentration. With over 30% of the stock market's capitalization tied up in a small number of companies, diversity is a major worry. The situation is highlighted in a chart from the UBS Global Investment Returns Yearbook 2024, which indicates the unusual extent of concentration in the S&P 500. The study aims to provide investors with a broader perspective beyond the narrow focus on the US market. While there are reasons why the 'Magnificent Seven' stocks might not continue to dominate, the study serves as a refreshing antidote to analysis solely focused on US stock concentration.