The ‘Magnificent Seven’ aren’t seven. Or magnificent.

 We have been here before. Time and again investors have discovered a small group of stocks or investments that supposedly can’t fail. 

During the last tech mania, back in 1999-2000, there were also four. They were called The Four Horsemen. The name comes from the apocalypse, in the Book of Revelation.

Given what happened next, you have to figure Wall Street has a secret sense of irony.

The early 1970s was famous for the “Nifty Fifty” of high-tech growth stocks that couldn’t fail. Like, er, Polaroid, Kodak, Digital Equipment and Xerox.

How’s your Polaroid stock doing?

At current stock-market valuations, these seven companies alone account for about 28% of the total value of the entire S&P 500. And just the Magnificent Four account for 15%.

In aggregate, they are valued at $14 trillion, or about 50% of total U.S. gross domestic product.

Most of them have stocks trading between 20 and 40 times the forecast per-share earnings. These are generous valuations, especially in an era when you can earn 5% just sitting in Treasury bills.

Tesla: 70 times earnings.

Brett Arends MarketWatch 30 April 2024

https://www.marketwatch.com/story/the-magnificent-seven-arent-seven-or-magnificent-83e9ea11