Three Cheers for the Magnificent Seven

“It’s not a stock market, it’s a market of stocks.” — “Maxims of Wall Street,” p. 158.

Special Note: Attention all subscribers: This coming weekend, I’ll be joining the Eagle cruise to Central and South America. If you would like to order copies of my books in time for Christmas, now is the time to do it at https://skousenbooks.com/. I’ll sign them before I leave. New editions of “The Maxims of Wall Street” and “Economic Logic” have just arrived. See more details below.

This year, 2023, was unusual. It turns out that the gigantic performance of the stock market this year — up over 20% — was due to the incredible performance of just seven stocks, which are now being labeled “The Magnificent Seven.”

As the chart below shows, without the Magnificent Seven, the stock market would be flat for the year.

Courtesy: Hotline — Committee To Unleash Prosperity

It turns out that these seven stocks are mostly household names and the biggest companies on the planet.

They are Amazon, Apple, Google, Facebook, Microsoft, Nvidia and Tesla. 

Note that these are all American-run technology companies. They are not Japanese, German or Chinese, although some of them are managed by immigrants, such as Satya Nadella (from India) and Elon Musk (from South Africa). For foreign entrepreneurs, America is still the promised land.

This year, these top seven companies have added trillions to our pension and 401k plans, including my own portfolio.

No Good Deed Goes Unpunished!

And yet oddly enough, success breeds envy and often contempt. Legislators from both sides of the aisles want to break up the Magnificent Seven, arguing that they are monopolists that dominate too much of their industries. It’s dangerous to be too successful in business.

It’s not unlike a hundred years ago, when officials broke up John D. Rockefeller’s Standard Oil into seven smaller companies. But the anti-trust actions against Rockefeller backfired. It wasn’t long before the total value of the oil companies were individually worth more than Standard Oil before the breakup. Rockefeller became even richer because of the breakup. In economics, it’s called “unintended consequences.”

It Pays to Diversify

We recommend all seven of these behemoth stocks in our Forecasts & Strategies portfolio of mutual funds and my favorite tech exchange-traded fund (ETF).

Recently, I talked to a top money manager whose portfolio is flat this year because he never invested in any of the Magnificent Seven stocks.

My answer: It’s often difficult to predict the big winners in the future, so it’s best to invest in an index. That’s what we do in Forecasts & Strategies and my own portfolio.

As John Bogle, who founded the Vanguard Group and the first index fund, stated, “Don’t struggle to find the needle in the haystack; just buy the haystack.” (“Maxims,” p. 159).

A Letter from a Subscriber

I recently received a letter from a subscriber who loves “The Maxims of Wall Street,” and finds wisdom on every page. He keeps it on his desk and refers to it regularly. May I suggest you do the same?

Alex Green, the chief investment strategist for the Oxford Club, calls “The Maxims” the Bible on Wall Street.

With the holiday season upon us, why not buy some copies, wrap them up, and give them to your best friends, colleagues and clients? And while you’re at it, buy one for yourself!

‘Best holiday gift for my clients!’

What better gift to give your friends, relatives, clients and your favorite stockbroker than the new 10th edition of “The Maxims of Wall Street?” I autograph and number each copy.

I’ve added some 20 new quotes to the new edition, including the following:

“Forecast a number or a date, but never both.” — Jason Zweig, Wall Street Journal

“The first rule of racing is to break off the rearview mirror.” — Italian race car driver

“Scared money don’t make money.” — Billy Napier, football coach

“The most important quality for an investor is temperament, not intellect.” — Warren Buffett

“Never bet on the end of the world. It only comes once, which is pretty long odds.” — Arthur Cashin, New York Stock Exchange floor manager 

“Charts are great for predicting the past.” — Peter Lynch

“There are two kinds of people who lose money: those who know nothing and those who know everything” — Henry Kaufman (“Dr. Doom”)

“If you mix your politics with your investment decisions, you’re making a big mistake.” — Warren Buffett

“The buyer needs one hundred eyes, the seller not one.” — George Herbert

“Efficient markets exist only in the textbooks.” — Warren Buffett

“Success is never final, and failure is not always fatal. It is courage that counts.” — Sam Rayburn

You can see why commodity guru Dennis Gartman says, “It’s amazing the depth of wisdom one can find in just one or two lines from your book. I have it on my desk and refer to it daily.”

“Maxims” has been endorsed by Warren Buffett, Jack Bogle, Kim Githler, Alex Green and Bert Dohmen, and was reviewed favorably by Barron’s.

It makes an ideal gift. As Rodolfo Milani states, “I find them to be ideal gifts for my best clients.”

‘Maxims’ at a Super Discount

Despite rising inflation and shipping costs, I’ve managed to keep the price of the new 10th edition to only $21 for the first copy, and only $11 for all additional copies. And if you order an entire box (32 copies), the cost is only $327 (around $10 each).

I pay all shipping costs if mailed to any of the 50 states. Plus, I autograph and number each copy. A real keepsake!

To order your copies, go to www.skousenbooks.com.

New 6th Edition of My Free-Market Guidebook Just Arrived!

More good news! The 6th edition of “Economic Logic,” my free-market guidebook, arrived yesterday in time for Christmas delivery. For more information on why my textbook is unique, go to Economic Logic, New 6th edition (2024) – MSKOUSEN.COM. The retail price is $129.99, but you pay only $35 postpaid through http://www.skousenbooks.com.

The 4th edition of “The Making of Modern Economics” is also available. Your price, only $35 postpaid.

Good investing, AEIOU,

Mark Skousen

You Blew it!

Last Week’s ‘Red vs. Blue State’ Debate

by Mark Skousen

There’s no doubt that the Republican-controlled states are “red” hot, while the states controlled by Democrats are cold “blue” when it comes to welcoming new residents.

That was apparent in the big debate last Thursday night between Florida Governor Ron DeSantis and California Governor Gavin Newsom. Host Sean Hannity showed chart after chart of the state of Florida enjoying lower taxes, less crime (except for the murder rate) and a more business-friendly environment. Of course, California still leads in technology, although Silicon Valley innovation is spreading to states like Texas.

Nevertheless, I wasn’t the only one who was deeply disappointed in the format of the debate. I talked to many of my friends, who switched channels half way through the “slugfest.” The governors often talked over each other, engaged in personal insults, frequently ignored questions and failed to respond to criticisms. It was the opposite of the civil debates we have at www.freedomfest.com, where each person is given plenty of time to make their case without interruption. We focus on solutions, not who is right, but what is right. But not on Fox News. Sean Hannity did a terrible job controlling the outbursts. And he was definitely not a “fair and balanced” moderator.

A classic example was when Hannity asked Governor DeSantis why homelessness was substantially lower in Florida than California, even though both states have warm sunny climates. Instead of explaining how Florida successfully dealt with homelessness, he launched into an attack on the California governor, and its homelessness problem.

The same happened with Governor Newsom, when asked repeatedly why so many people are leaving California, or why crime was so bad in California. He never answered the question. Instead, he just turned on Governor DeSantis and his record in Florida.