A group of stocks called the “Magnificent Seven” have been on a tear, and they make up nearly 28% of the SPDR S&P 500 ETF Trust
SPY,
which tracks the U.S. benchmark index.
The S&P 500
SPX
has returned 18.7% this year with dividends reinvested. Here’s how the Magnificent Seven (actually eight stocks, with two common share classes for Alphabet Inc.
GOOGL,
GOOG,
) have performed, and how their forward price-to-earnings ratios have changed:
| Company | 2023 return | 2022 return | Return since the end of 2021 | Forward P/E | Forward P/E at end of 2022 | Forward P/E at end of 2021 |
|
Apple Inc. AAPL, |
36% | -26% | 0% | 28.3 | 20.5 | 30.2 |
|
Microsoft Corp. MSFT, |
42% | -28% | 2% | 29.2 | 23.1 | 34.0 |
|
Amazon.com Inc. AMZN, |
72% | -50% | -13% | 48.9 | 46.7 | 64.9 |
|
Nvidia Corp. NVDA, |
212% | -50% | 55% | 34.8 | 34.4 | 58.0 |
|
Alphabet Inc. Class A GOOGL, |
57% | -39% | -5% | 21.3 | 16.9 | 25.4 |
|
Alphabet Inc. Class C GOOG, |
57% | -39% | -4% | 21.4 | 17.0 | 25.3 |
|
Tesla, Inc. TSLA, |
124% | -65% | -22% | 59.2 | 22.3 | 120.3 |
|
Meta Platforms Inc. Class A META, |
159% | -64% | -7% | 18.9 | 14.7 | 23.5 |
| S&P 500 | 19% | -18% | -3% | 18.7 | 16.8 | 21.5 |
| Source: FactSet | ||||||
The forward P/E ratios are based on rolling 12-month earnings-per-share estimates among analysts polled by FactSet.
The Magnificent Seven have all shown remarkable gains this year, even though Apple Inc.
AAPL,
Microsoft Corp.
MSFT,
and Nvidia Corp.
NVDA,
are down from the end of 2021. Forward P/E ratios have increased this year for all seven, and for the S&P 500, but they are all lower than they were at the end of 2021.
But at this point, investors looking for gains on technology stocks may need to look beyond their index funds and these giant companies. Michael Brush explains why the seven now appear to be a “crowded trade” and names three other technology stocks to consider.
The ARM initial public offering
American depositary receipts of Arm Holdings PLC
ARM,
shot up 25% on Thursday after they were listed on the Nasdaq. The company is 90% owned by SoftBank Group Corp.
Arm Chief Financial Officer Jason Child discussed the company’s plans to monetize its technical innovations with Wallace Witkowski.
More IPO news and opinion:
How much money do you need if you wish to retire?
Even if the numbers seem to be working out, you might leave something out of your calculations. Allesandra Malito writes the Help Me Retire column and this week has some tips for a couple that is working toward their big decision.
Related: Here’s the latest Social Security COLA estimate for 2024
Auto workers are on strike
About 13,000 workers went on strike at three U.S. auto plants on Friday, one apiece for Ford Motor Co.
F,
General Motors Co.
GM,
and Stellantis NV
STLA,
as the manufacturers’ contracts with the United Auto Workers union expired.
Andrew Keshner looks ahead at how the strike might affect the entire U.S. market for used and new vehicles.
Developments in EV land
Claudia Assis explains how Tesla can benefit from the strike against the Big Three U.S. auto manufacturers.
Joy Wiltermuth reports on Tesla’s plan to securitize $1.8 billion in vehicle leases.
Meanwhile, shares of Nikola Corp.
NKLA,
have been popping on the news that it expects to begin delivering hydrogen-powered trucks this month. For context, Nikola’s stock is still down 96.5% from three years ago.
A big week for Powell
The Federal Open Market Committee will have its next policy meeting next week on Tuesday and Wednesday, followed by a policy announcement Wednesday afternoon. Once again, Federal Reserve Chairman Jerome Powell and the committee are looking at conflicting data, with the consumer-price index in August showing its largest increase in 14 months, even as the U.S. unemployment rose to an 18-month high.
Economists expect the Fed to keep the federal-funds rate in its current target range of 5.25% to 5.50%, with no surprises from Powell.
But investors are always looking for clues on what may lie ahead. Gregg Robb outlines four things to watch for at next week’s Fed policy meeting.
How to part ways with your investment adviser
You or loved ones you plan for might need the help of an adviser to manage investments. The right adviser will have extensive knowledge of growth and income strategies that can be tailored to your current and long-term needs. But levels of service can vary and the fees can be very high.
If you have worked for decades and saved diligently, it is possible you have built up a million-dollar nest egg. If the money has been broadly invested for growth in a retirement account and you are getting ready to end your career, you might work with an adviser to manage the portfolio to provide the income you need.
But if you pay a standard 1% annual fee to an adviser, that is $10,000 on a million-dollar account, which works out to $833 a month. So here’s your first bit of advice if you are selecting an adviser: Talk to friends and family members to learn of any advisers they have been working with and whether or not they have been happy with the service. Learn about advisers’ fees, which vary not only by account size, but by firm and by the level of expected service. You may well pay less. It never hurts to ask or to negotiate.
One problem with the word “adviser” is that it is used too broadly. Beth Pinsker can help you to understand the difference between a real investment adviser and a salesperson.
She also has advice on how to move on from your investment adviser.
How can you make a move when mortgage loan interest rates are so high?
It is easy to understand why so many would-be sellers are remaining in their homes, with low mortgage rates locked in. But there are still some people are still selling, buying and moving. Aarthi Swaminathan covers the reasons for their moves and how they are getting them done.
More from Aarthi Swaminathan:
- The 1% down payment is here. Is it a win-win — or should cash-strapped home buyers avoid it?
- Student loan payment resumption will be a ‘major financial shock’ for renters, Moody’s says
Bipartisan agreement
It is rare for Democrats and Republicans in Congress to agree on regulatory topics, but there has been pushback on both sides of the aisle against new rules proposed by federal regulators that would increase banks’ capital requirements. There is concern the new growth would stifle economic growth.
More: JPMorgan Chase CEO Dimon says consumers are good, new banking regs are bad
Will you live to be 100?
If you are putting together retirement plans, it is better to err on the side of caution, to avoid outliving your money. That is one thing to keep in mind if you have the option of waiting until the age of 67 or 70 before you begin to collect Social Security payments.
Jessica Hall interviews William Kole, the author of “The Big 100: The New World of Super-Aging,” who talks about how to optimize chances of living a longer, healthy life.
Rachel Koning Beals interviews Dan Buettner, who has done research on “Blue Zones,” which are areas where people tend to live longer. Diet plays an important role in longevity, he says.
Read on: Are you 95 and fit? This ‘SuperAgers’ study wants to hear from you.
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