Magnificent Seven
Dear Dr. Per Cap:
The other day, I heard someone talking about investing in the Magnificent Seven. What the heck are they talking about? The only Magnificent Seven I know about is the movie with that cool Native actor, Martin Sensmeier, and of course our “Oceti Sakowin” ― the Seven Council Fires of the great Sioux Nation.
Signed,
Confused in South Dakota
Dear Confused,
Your combination of pop culture and Native cultural knowledge makes my day!
Now, let’s talk shop. The Magnificent Seven are the latest buzz in the investing world and refer to seven super performing tech stocks that collectively accounted for 60% of the S&P 500’s 25% gain last year.
We all know four of the companies that have investors drooling like my aunt’s St. Bernard: Apple, Microsoft, Amazon, and Tesla. Two more are also high-profile brands, but have changed their names in recent years to reflect the evolution of their businesses: Alphabet, formerly known as Google, and Meta Platforms, which started as Facebook, the world’s most popular social media website, before acquiring an empire of other social media and artificial intelligence or AI companies. The last one is Nvidia, a company that makes graphics processing units for video games and other applications.
It’s nearly impossible to overstate how large and influential these global corporations are. When combined, they hold over $12 trillion of market capitalization. To help put that in perspective, if these seven companies were a country with a $12 trillion gross domestic product, it would rank #4 on the list of the world’s largest economies, just below China, the United States, and India.
Catchy names and acronyms are nothing new among trend-chasing investors looking for the next big opportunity. A few years ago, the FAANG stocks were all the rage. That’s Facebook (now Meta of course), Amazon, Apple, Netflix, and Alphabet, aka Google, in case you’re wondering.
And the jargon doesn’t just apply to sexy tech stocks. The Dogs of the Dow is a term that refers to the 10 highest-yielding dividend stocks of the Dow Jones Industrial Average, one of the oldest stock indexes in the world that dates back to the 1800s.
Hot stock nicknames are fun to follow, but please take them with a few grains of salt or better yet ― a few transistors of a microchip. There’s no guarantee the Magnificent Seven, or any other stocks, will continue their stellar past performance this year or next.
And rather than allowing yourself to be influenced by a cool name, always remember to do your homework before buying stocks or any other investment. The FINRA.org website is a great place to start.
I’ll leave you with a quote from The Magnificent Seven’s Chris Adams: “You learn fast!”
Ask Dr. Per Cap is a program funded by First Nations Development Institute with assistance from the FINRA Investor Education Foundation. For more information, visit www.firstnations.org. To send a question to Dr. Per Cap, email askdrpercap@firstnations.org.
