MAG7 Vs The S&P 493

Dividends Forever
5 min readJan 31, 2024

Only seven stocks are pushing the S&P 500 to new highs.

Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla.

These are “The Magnificent 7.”

Today, I want to explain why the The Magnificent 7 (often shortened to MAG7) are holding the whole market up. And, I want to share why I believe this isn’t a bubble — despite what many people claim.

The Magnificent 7 Vs Everybody Else

In 2023, the S&P 500 posted a 24% gain.

While most people know that the S&P 500 consists of 500 different stocks, many people are unaware that these investments are distributed across 11 different sectors.

In your typical S&P 500 index fund, you have:

  1. Information Technology — Computers, operating systems, web infrastructure. Includes stocks like Microsoft and Oracle.
  2. Health Care — Medical devices and pharmaceuticals. Think Abbott Laboratories or Johnson & Johnson.
  3. Financials — Banks, credit card providers, and insurance companies. American Express, Goldman Sachs, Berkshire Hathaway…
  4. Consumer Discretionary — An interesting sector. Consumer Discretionary used to represent retailers or vacation properties, but it’s morphed into tech. Starbucks, Nike, and McDonald’s are in here. But so are Amazon and Tesla.
  5. Communication Services — Another sector that’s morphed into tech. Communication Services was phone companies and Internet providers. However, the sector now weighs heavily in favor of Netflix, Meta, and Alphabet.
  6. Industrials — When you think “Industry” you might image muscle men swinging sledge hammers or pouring molten steel — like in an Ayn Rand novel or old Soviet propaganda posters. And while that is part of this sector, Industrials also covers airlines, FedEx, and Boeing.
  7. Consumer Staples — Toilet paper, soap, food. These are things everybody needs to buy. The companies here are exactly what you’d expect, with firms like Procter & Gamble and Kimberly-Clark.
  8. Energy — This sector is mostly oil and gas companies like Exxon Mobil and Chevron.
  9. Utilities — Companies that produce or provide electricity, running…

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