By: Matt Garrott
The S&P 500 squeaked out a small gain for November, up 0.25%, including dividends. The result was boring, but it was a turbulent month for the index with headlines driving dips and rebounds. It’s times like these that it’s tempting to lean on creative market indicators. A personal favorite of mine focuses on a certain pressed pork sandwich.
McDonalds brought back the McRib on November 11th. Sharp-eyed market watchers have pointed out that the sandwich’s return often coincides with positive stock market returns. Does the McRib activate an appetite for risk as well as pork? More likely, it’s a statistical quirk layered on top of the market’s long-term upward trend. The McRib indicator may have a better record than most year-end forecasts from Wall Street, but that doesn’t mean you should take investment advice from a fast food menu. It’s a delicious coincidence, but not a financial plan.
Even as the market continues to climb, there is worry about concentration in the largest S&P 500 stocks, the “Magnificent Seven”: Nvidia, Apple, Alphabet, Microsoft, Amazon, Meta, and Tesla. At times, it seemed that these few names dragged the entire index higher all by themselves, but that may be changing.
Once an exclusive club home only to tech titans like Apple and Nvidia, the trillionaire club is starting to get crowded. Every Mag7 stock now uses a T for their market cap, but now Broadcom and Berkshire Hathaway have also crossed that mark with Eli Lilly not far behind, as of month-end. It might be a sign that market leadership is broadening into other sectors.
Being part of the Magnificent Seven hasn’t guaranteed outperformance recently. In November, only Alphabet and Apple outperformed the S&P 500. Year-to-date, only Alphabet and Nvidia pulled out ahead of the index. Below is a look at the Mag7 stocks and close rivals as of month-end.
| Name | Market Cap (in $Trillions) | Month to Date Total Returns | Year to Date Total Returns |
| S&P 500 (TR) | 0.25% | 17.81% | |
| NVIDIA Corp. | 4.348 | -12.59% | 31.83% |
| Apple, Inc. | 4.161 | 3.24% | 11.85% |
| Alphabet, Inc. | 3.813 | 13.87% | 69.70% |
| Microsoft Corp. | 3.619 | -4.80% | 17.59% |
| Amazon.com, Inc. | 2.498 | -4.50% | 6.30% |
| Broadcom Inc. | 1.827 | 9.02% | 75.06% |
| Meta Platforms, Inc. | 1.613 | -0.06% | 10.92% |
| Tesla, Inc. | 1.419 | -5.78% | 6.52% |
| Berkshire Hathaway, Inc. | 1.101 | 7.60% | 13.35% |
So why not just hold Alphabet and Broadcom? That’s the same question some were asking about Nvidia over the last couple of years.
The real question is when do you sell Nvidia to buy Alphabet? Can you time the switch correctly and consistently over time? History says even professional active managers find this difficult, if not impossible. Holding Broadcom, Alphabet, or Nvidia looks brilliant in hindsight. Choosing Microsoft, Tesla, or Amazon was middling at best.
Where does that lead us? Back to Fairway’s investment philosophy.
- Don’t chase yesterday’s winners
- Low-cost, passive strategies make more sense than trying to time the market
- Let the market do the heavy lifting by diligently rebalancing a diversified portfolio
Security: The Other Risk We’re Watching
One area where we are active is security. We’ve noticed an uptick in attempted fraud via emails, texts, and phone calls aimed at getting people to click a link, share a code, or otherwise open the door to their accounts. The softest targets remain people, not software.
What we’re doing
- Working closely with Schwab, our primary custodian, to take advantage of their security infrastructure.
- Leveraging our relationship with Focus Financial and our external security consultants to strengthen and test our systems.
- Calling to confirm outgoing wires or if we see unusual activity in client accounts. This can feel inconvenient, but it’s a step we’ve been using to make it harder for bad actors to do harm.
What you can do
- Activate two-factor authentication for your financial accounts wherever possible
- Use a password manager to create and store strong, unique passwords
- Be skeptical of unexpected emails, texts, or calls – especially those urging quick action or to click a link
Schwab has an excellent website for more information on strengthening your online security: https://www.schwab.com/schwabsafe. We will probably remind you to be alert to fraud in our quarterly meetings or other communications. It sounds like a broken record, but prevention is easier than undoing damage.
Finally, since Thanksgiving is still relatively close in the rear-view mirror, we want to say thank you. Thank you for the trust you place in us, especially during years when the markets are noisy, headlines are confusing, and even fast food sandwiches are credited with moving the markets. Our goal is to help you tune out that noise, stay focused on your plan, and provide peace of mind for you to focus on what matters most to you and your family.
Market Commentary Disclosures
Fairway Wealth Management LLC (“Fairway”) is an SEC Registered Investment Adviser. Registration does not imply an endorsement of the firm by securities regulators nor does it indicate that the adviser has attained a particular level of skill or ability.
This post represents the opinions of Fairway as of the date indicated and may contain forward-looking statements, predictions and forecasts. Forward-looking statements necessarily involve risks and uncertainties, and undue reliance should not be placed on them. There can be no assurance that forward-looking statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in such statements. Past performance is no guarantee of future results. Market conditions can vary widely over time and can result in a loss of portfolio value.
This post is prepared using third-party sources. Fairway considers these sources to be reliable; however, it cannot guarantee the accuracy or completeness of the information received. This information is educational and general in nature and is not intended to be, nor should it be construed as specific investment, tax, or legal advice. Charts are provided for the illustrative purpose of general market commentary. No client or prospective client should assume the above information serves as the receipt of, or substitute for, personalized individual advice.
