The Magnificent Seven Myth Is Starting to Crack

Core Viewpoint - The S&P 500 has had a strong year, up approximately 15% to 17%, and is on track for a third consecutive year of double-digit gains, marking one of the longest bull runs since the mid-1990s [1][15]. Group 1: Market Dynamics - A market top can form when leading stocks begin to lose momentum, indicating that fewer stocks are driving the market higher, which reduces the margin for error [2]. - Historical patterns show that market leadership rotates over time, with current rapid rotations being notable [3]. - The performance of the "Magnificent Seven" stocks has declined, with only Nvidia and Alphabet outperforming the S&P 500 this year, while others like Amazon and Microsoft have lagged [4][5][6]. Group 2: Investor Sentiment - There is a prevailing belief that investing in the Magnificent Seven is a foolproof strategy, but this narrative is beginning to falter as their performance weakens [6]. - Long bull markets can lead to complacency among investors, which can be dangerous as history suggests that such trends do not last indefinitely [7]. - The adage "nobody ever went broke taking a profit" remains relevant, emphasizing the importance of recognizing when to secure gains [8][20].