Broad market stocks lead a new bull market
The guest argued that a 'bull within a bowl' is occurring, where a corrective phase in over-owned 'new era' mega-cap growth stocks is being successfully offset by a new bull market in under-owned, better-valued 'broad market' stocks.
The argument
The guest pointed out that while the Magnificent Seven and technology sectors have struggled and become mere market performers over the past year, the S&P 500 remains within 5% of its all-time high. This resilience is attributed to a 'successful baton pass' to cyclical sectors, small caps, and value stocks that have essentially been in a profit recession since 2022 and are now poised for expansion.
The thesis, stress-tested
✓ What validates it
- ✓Sustained relative outperformance of equal-weighted S&P 500 versus market-cap weighted S&P 500
- ✓An uptick in corporate profit margins for non-tech sectors in upcoming quarterly reports
▸ Risks discussed
- ▸The corrective phase in mega-cap tech could deepen and drag down the broader indexes
- ▸Broad market sectors may fail to sustain earnings growth without policy stimulus
Hear it yourself
"I personally think, though, it's pretty encouraging, and I've written a lot about this in the last few months, that we now have the the, new era stocks, whether you look at S and P technology at 500 technology rolled in price or you look at the Mag seven rolled in price, they've come off a fair amount, and they're now market performers…"
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