The S&P tech sector is still pacing the
rest of the S&P 500 this year and what
is going to be the 11th year of
outperformance in the past 12. That is
the market. So, we use that as an excuse
to take a look back in history. Back in
history at one of the key moments in the
formation of this rally, August 19th,
2020, that was the day Apple's market
capitalization passed $2 trillion, the
first stock to ever surpass that level.
And while it took 38 years to reach that
first $1 trillion in value, that next 1
trillion only took two years. It was
aided, of course, by the pandemic
sell-off that helped, but it also was
aided by Tim Cook's management savvy and
just a shift in the way investors were
thinking about the company in the tech
sector overall. Now, Apple's market
value on this day in history back in
2020, it almost matched the entire index
of the Russell 2000 small cap stocks.
And then back on this day, we saw so
many headlines, so much hand ringing
about whether those valuations were
justified. Headlines screaming that only
six stocks were responsible collectively
for most of the gains that we saw in the
broader market for that year. Up 40% as
a group, just six stocks, while the S&P
was down 4% when you exclude those six
stocks. Not much has changed since.
Apple now has a $3 trillion valuation.
So too does Microsoft. And Nvidia, of
course, is north of $4 trillion. And
like in 2020, this broad market rally is
anything well but broad. Just five
stocks, all tech stocks, account for
more than half of the market gains. 300
points of the 500 points added to the
S&P so far this year. While the extreme
concentration rivals the 1998 dot
bubble, unlike 1981 1998, excuse me,
those five stocks along with three or
four others to be sure, make up the
lion's share of profit growth for the
market as a whole. Maybe that's why some
are betting that today's sell-off is
just a mere bump in the road rather than
some sort of wholesale about