FINANCIaL
FIELd NOTES
Is US Market Concentration a Concern?
Over the past decade, the weight of the top 10 stocks in the S&P 500 has nearly doubled.
It’s nearly impossible for the market to be up or down without these big stocks (Apple, Amazon, Google, etc.) going in the same direction. This is not a first – in the 70s, over 40% of the market was dominated by the top 10 stocks, and even more by the “nifty fifty.” While this does introduce some risks if these companies were to be broken up or face increased competition, in general, I don’t view it as a significant concern for three main reasons…
The Origin of Negative News
I have written here before about the tactics of mass media and how they influence our decision-making. But before the mid-19th century, most media were purely informational. Newspapers came out weekly, cost on average 6 cents, and covered business and politics.
In 1833, a man named Benjamin Day created Penny Press, a newspaper that cost 1 cent. Suddenly the masses were able to read the newspaper as the cost to purchase one plummeted. The only problem was that Day was selling the newspaper at a substantial loss. At this point, he introduced what is now a widely accepted revenue model known as advertisement. He sold ad space in the newspaper that readers would see.
However, to attract advertisers, Day needed more readers. It was at this point that the type of news reported began to change drastically…
Understanding the Medicare “Donut Hole” and Tips for Navigating It
In a recent meeting with a client, they voiced frustration over a recent trip to the pharmacy. They had met their prescription drug coverage deductible and expected to pay a co-pay of $90 for an expensive drug they were taking. Instead, they were charged over $500. He called his insurance agent and was told he had reached the dreaded “donut hole” or what is officially known as the Medicare Part D coverage gap.
The “Donut Hole” is a phase in prescription drug coverage where beneficiaries experience a temporary increase in out-of-pocket expenses for their medication…
What’s Driving the Bull Market: A Wave of Earnings Growth
In the world of finance and media, there are often conflicting narratives about the state of the economy and stock market. Recently, with the S&P 500 reaching a new all-time high, there have been many voices in the media questioning the justification of the ongoing bull market.
However, a closer look at the numbers reveals that many of the companies reaching all-time highs are also significantly more profitable than they were in the past. The largest 20 US companies have grown earnings at 15% per year over the last 5 years on average…
Historically, All-Time Highs Are Nothing to Panic Over
With the S&P 500 reaching all-time highs for the first time in nearly 2 years, many are skeptical that a bear market is coming. Investors are often tempted to assume extremes are always around the corner - either a new bull market or the next bear market.
The reality is that somewhere in the middle is where most investing happens - but we often mistake it for the extreme…
10-Year Market Outlook
Because of the variability of stock market returns in the short run, I steer clients away from short-term tactical changes to their portfolio and prefer to rely on the weighty evidence of history, along with long-term thematic trends in the market.
While no one has consistently and accurately predicted what the stock market is about to do, several well-respected firms provide long-term outlooks that have proven to be more accurate than short-term predictions.
Below are the 2024 10+ year estimates…