Not So Magnificent Now

Chart of the Week #47

Back in December, I wrote about the S&P 500 reaching 6,000—the highest it’d ever been in the stock market’s history. Here’s what I had to say:

The “Magnificent 7”—Microsoft (MSFT), Meta (META), Apple (AAPL), Amazon (AMZN), Nvidia (NVDA), Alphabet (GOOGL), and Tesla (TSLA)—now make up a record 34% of the S&P 500’s market cap. That’s more than a quarter.

Since then, the market drifted sideways before climbing to one final peak on February 19. Then everything went downhill from there.

As of last Friday’s close, the market has inched up from its double-digit lows—levels we haven’t seen since September. And the Magnificent 7? Not so magnificent anymore. Take a look at the next chart.

On average, Mag 7 stocks have fallen more than 17%, with Tesla plunging nearly 33%.

Now, before anyone (rightfully) blames anti-Musk activists running amok or Trump’s tariffs, here’s the key takeaway: While those factors play a role, the bigger picture is simple—what goes up must eventually come down. History has proven that time and time again.

Remember, these seven stocks led the market’s gains for nearly two years. In fact, just four of them—Amazon, Meta, Microsoft, and Nvidia—accounted for nearly 70% of the stock market’s growth last year.

Think about that. It’s like a sports team where just four players are scoring 70% of the points.

This market had become lopsided and top-heavy, with fundamentals nowhere in sight.

This is all to say that what we’re witnessing isn’t some unexpected black swan event—it’s the inevitable rebalancing of a market that abandoned rational pricing. I’ve been warning for months that this house of cards couldn’t stand forever. Any slight breeze was bound to trigger the correction we’re seeing now.

If you avoided the FOMO and didn’t buy into the hype at the peak, well done. If you were in—and still are—brace yourself, the pain may not be over. I expect big tech and growth giants to keep getting pummeled as investors weigh the initial impact of President Trump’s reset.

Regards,

Lau Vegys