I bet you own more than one stock in your portfolio... After all, you can't see the future. You don't have a crystal ball.
The Portfolio Crystal Ball Doesn't Work
By Marc Gerstein, director of research, Chaikin Analytics
I bet you own more than one stock in your portfolio...
After all, you can't see the future. You don't have a crystal ball.
If you did, you would simply invest all your money in the best-performing stock. And then, you would spend all your time doing something other than investing.
Of course, that isn't how the real world works. We face uncertainty – and a lot of it today.
One stock won't cut it. It could go up, down, or sideways. So as a result, we need to protect our portfolios from the uncertain future of any single company.
But there's a problem...
Wall Street wants you to believe it has a crystal ball. And as crazy as it sounds, many investors buy it. That's a recipe for disaster in many cases.
So today, I want to help you avoid falling into the trap of Wall Street's crystal ball...
For the past 12 years, this simple, 94% accurate, crisis-proof strategy has been handing some Americans as much as $4,000 per month in "instant cash" payouts... but right NOW could be the best moment ever to start using it. Click here for details.
As Pete wrote, Apple makes up roughly 7% of the S&P 500. It's currently more than 12% of the Invesco QQQ Trust (QQQ). And it's an incredible 22% of the Technology Select Sector SPDR Fund (XLK).
So as Pete concluded, such large allocations to Apple mean its struggles can "bring down the whole market."
You might not realize it, but you just caught a glimpse of Wall Street's crystal ball. It's buried in the "boring" topic of portfolio allocation.
It's crazy that one stock can influence the market so heavily.
And frankly, I bet every institutional investor would agree with me. Yes, even the ones on the S&P 500's selection committee and those involved with putting together QQQ and XLK.
Those people are too smart, too educated, and too skilled to think something like that makes sense. But the thing is... they're selling the crystal ball.
Think about it this way...
Imagine you believe equally in the potential of two companies. It would make sense to invest 50% of your money in each stock.
Now, suppose you felt twice as confident about Stock A over Stock B. Obviously, you would want to invest two-thirds of your capital in Stock A and the rest in Stock B.
But when it comes to the S&P 500's selection committee, that isn't what happens...
The committee doesn't think about or choose a specific allocation. The members just look at "market capitalization weighting" and let the chips fall.
Apple's influence on the S&P 500 has nothing to do with its investment merits or any level of risk or uncertainty. Instead, the allocation is just determined by the total dollar amount of its outstanding stock.
It's a pretty goofy system when you stop to think about it. But hey, selling the crystal ball works – until it doesn't. When those big stocks sell off, it leads to more chaos in the market.
Folks, you don't have to buy it...
Be your own boss in the market for stocks. Do your own research. Draw your own conclusions.
Don't rely on a crystal ball to manage your portfolio allocation.
Good investing,
Marc Gerstein
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
-0.01%
4
21
5
S&P 500
+0.07%
55
322
117
Nasdaq
-0.31%
8
67
24
Small Caps
-0.14%
176
1204
510
Bonds
+1.14%
Health Care
+1.22%
12
44
8
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are Bearish. Major indexes are mixed.
* * * *
Top Movers
Gainers
VFC
+6.08%
AMT
+4.73%
LLY
+4.39%
MKTX
+4.24%
UAA
+3.77%
Losers
ROST
-22.47%
DE
-14.07%
AAP
-7.23%
DG
-6.80%
TSLA
-6.42%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
NDSN, HEI, ZM
AAP
No earnings reporting today.
Earnings Surprises
DE Deere & Company
Q2
$6.10
Missed by $-0.59
ATEX Anterix Inc.
Q4
$-0.67
Missed by $-1.12
FL Foot Locker, Inc.
Q1
$1.67
Beat by $0.21
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+1.26%
Health Care
+0.92%
Utilities
+0.43%
Materials
-0.08%
Communication
-1.68%
Real Estate
-1.69%
Financial
-1.82%
Information Technology
-3.53%
Industrials
-3.61%
Discretionary
-7.82%
Staples
-8.10%
* * * *
Industry Focus
Health Care Equipment Services
6
44
31
Over the past 6 months, the Health Care Equipment subsector (XHE) has underperformed the S&P 500 by -10.22%. Its Power Bar ratio, which measures future potential, is Very Weak, with more Bearish than Bullish stocks. It is currently ranked #10 of 21 subsectors and has moved up 4 slots over the past week.
Indicative Stocks
NVCR
NovoCure Limited
DXCM
DexCom, Inc.
SENS
Senseonics Holdings,
* * * *
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