If you follow the market indexes, you get the impression that we are in a very strong market. But like all things, you need to pop the hood and look underneath to get the complete picture.
What we have really had this year, and on a global basis, is a really strong rally in tech stocks. As a matter of fact, we now have five tech stocks that control over 11% of the S&P 500 index. These five stocks are collectively up more than 21% this year, nearly triple the rest of the market.
Think of this in terms of the U.S. House of Representatives. Each of our 50 states is represented in the House based on population. The bigger the population, the more representatives. This overweighting of the S&P 500 would be like New York, California, and Texas getting bigger and bigger, and thus gaining more votes in the House.
Is this concentration of performance in Tech bad? Not necessarily, and thus my rubber band analogy. Tech stocks have been stretching the rubber band around the world. Three things can happen from here.
The band can break, which is a big Mr. Yuck. The band can contract (which we would call a correction), or the tech stocks can pull the rest of the market up.
During the last 4-6 weeks, I have seen evidence that the rest of the market is beginning to gain. Stay tuned and we shall see how this plays out.
In other news, the dollar has continued to weaken this year and in response I have increased our exposure to International markets, roughly 20% in my fully diversified growth portfolios. The money for this came from the energy holdings we started the year with. As those began to sell off, that money went into international positions.
That’s it for now, get back to enjoying that new barbecue!!!
Thank you for your continued Trust and Confidence.
Gregory G. Riggs, CFP
Accredited Investment Fiduciary
Securities and Advisory Services offered through KMS Financial Services, Inc. Member FINRA/ SIPC
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice. This information is for educational purposes only.