The Magnificent 7

In the U.S. stock market, for some years now there have been companies that stand out for their exceptional performance and have been dubbed “The Magnificent 7.” Leading

innovation and consolidating the development of new industries, companies such as Google, Amazon, Facebook, Tesla and Nvidia are undoubtedly setting the pace. A couple of figures: Just

Apple and Microsoft are 15% of the index; in addition, this quarter—according to analysts' projections—the 5 largest U.S. stocks will have earnings growth

of 64%. The remaining 495 in the S&P 500 index will average a 6% decline in earnings.

All in all, having few players that “pull the cart” is more common in investing than it seems.

From 1926 to 2017, only 86 companies (4% of the market) were responsible for half of the value creation in the U.S. stock market. What's more, nearly 60% of stocks failed to beat the return of Treasury bonds.

This is not an exclusive feature of the U.S. economy. Emerging markets recently reached their highest value since 2022. Only one company

(Taiwan Semiconductors) explains 60% of that daily rise.

A diversified strategy is the only way to achieve good performance over the long term. It's not necessary to know which companies will be the next Magnificent ones.

This column was originally published in La Segunda [Link]