Blueprint for a Million-Dollar Nest Egg in 4 Years

It's one of the first principles every investor learns... Diversification. As the old saying goes, you don't want to put all your eggs in one basket.

Diversification Still Matters in a Top-Heavy Market By Joe Austin, senior analyst, Chaikin Analytics It's one of the first principles every investor learns... Diversification. As the old saying goes, you don't want to put all your eggs in one basket. The concept is simple – by spreading your investments around, you can lessen the impact of poor performers or mistakes. And historically, it has worked. In finance, diversification is the easiest way to reduce your risk without sacrificing return. But lately, diversification has gotten a bad rap. That's because tech – and particularly the "Magnificent Seven" mega caps – have been such runaway hits. Last year, those seven stocks posted an average return of more than 60%. That's more than double the S&P 500 Index's return of about 23%. And the Magnificent Seven accounted for more than 50% of the S&P 500's return in 2024. This year, they're still collectively having an outsized effect on returns... Year to date, the S&P 500 is up around 12%. Over the same span, the Magnificent Seven have gained about 17%. And if you're an investor buying into an S&P 500 index fund today, you're putting a lot of your eggs into that Magnificent Seven basket. In July, the S&P 500's top 10 stocks reached a record concentration of 38%. Last week, they ticked even higher to around 40%. That's up from 16% back in 2014. All this leaves investors with a tough choice... If you're investing via an index fund, the very strategy designed to protect you from concentration has become concentrated itself. Many investors were fine with that... as long as the Magnificent Seven worked. But not all seven stocks are such big winners anymore. Nvidia (NVDA), Alphabet (GOOGL), Microsoft (MSFT), and Meta Platforms (META) are up between roughly 20% and 30% this year. But Amazon (AMZN), Tesla (TSLA), and Apple (AAPL) have struggled. Each of those three stocks are underperforming the S&P 500. So when you invest in an index fund today, you're buying some losers along with the winners in big stocks. And you're doing so when concentration is at an all-time high. This creates an opening for a different approach. It's one that lets you be more selective about which stocks deserve your money. And rather than holding you back, let diversification be your way forward... Recommended Links: Here's What You Missed Yesterday In the wake of yesterday's critical Federal Reserve decision, two financial legends joined forces to share a brand-new discovery that could help you find stocks that will deliver gains of 200%... 500%... or even 800% by this time next year – and show you which stocks are DOOMED to crash up to 90% or more. Click here to stream the replay now (includes FOUR free stock recommendations). Forget Nvidia: Wall Street Legend Names His No. 1 Hidden Stock Marc Chaikin, the Wall Street legend followed by more than 800,000 readers in 148 countries, just went public with his newest trade... and it will surprise you. Get the full details – for FREE – right here. Plenty of Opportunity for Diversification in This Market When I began my career on Wall Street, investors still had a hangover from the "Nifty Fifty." You've probably heard the term before. It refers to a group of blue-chip growth companies that dominated the market's performance during the late 1960s and early 1970s. And in an eerie parallel with today, common wisdom was that it didn't matter what price you paid for these stocks. At the peak of this frenzy, Polaroid traded for around 90 times earnings. Xerox, IBM, and General Electric traded at multiples of roughly 30 to 40 times earnings. And when the bear market struck in 1973 and 1974, the Nifty Fifty didn't just underperform... Some lost 80% to 90% of their value. For an investor, that's a horrible loss to bear. But in hindsight, the Nifty Fifty ended up doing just fine. In 1998, Jeremy Siegel – a professor at the Wharton School – performed a post-mortem on the Nifty Fifty. He calculated peak valuations in those stocks to see whether the valuations were justified.  And Siegel proved that had you held on, performance was roughly in line with the market. More interesting, though, was that Siegel showed most Nifty Fifty valuations made sense. Yes, they were rich. But the companies ended up growing into those valuations. And as Siegel showed, the sell-off was mostly a result of a change in investor confidence. That's another benefit of diversification. It doesn't just protect your portfolio... It protects your psychology, too. By spreading your investments across many stocks, you can weather inevitable storms without panicking at the worst possible moment. Investors who bailed out during the crash missed the recovery that made those stocks worth holding after all. Today, we obviously can't know where exactly the Magnificent Seven stocks will end up in the future... But collectively, the Power Gauge sees upside ahead for the group. Five of them are "bullish" or better in our system. And the other two are in "neutral" territory. Fortunately, the Power Gauge also sees plenty of big opportunities in other corners of the market. It currently rates 600 stocks "very bullish." So when it comes to stocks with the potential for strong performance ahead, there are lots to choose from in this market. The key is finding the right mix that lets you sleep at night while still benefiting from what's working in the market. The Nifty Fifty taught us that great companies can survive terrible valuations, but only if you can survive the ride. And diversification makes that ride bearable. Good investing, Joe Austin Market View Major Indexes and Notable Sectors     # Hld:     Bullish     Neutral     Bearish Dow 30 +0.54% 10 14 6 S&P 500 -0.12% 143 228 129 Nasdaq -0.2% 28 54 18 Small Caps +0.26% 637 982 294 Bonds -0.25% — According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are Bullish. Major indexes remain all bullish. *  *  *  * Sector Tracker Sector movement over the last 5 days Consumer Discretionary +3.74% Communication +3.67% Financial +1.73% Energy +0.99% Information Technology +0.47% Real Estate +0.41% Consumer Staples +0.38% Materials +0.18% Health Care -0.09% Industrials -0.15% Utilities -0.32% *  *  *  * Industry Focus Mining Services 16 13 0 Over the past 6 months, the Mining subsector (XME) has outperformed the S&P 500 by +34.75%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #2 of 21 subsectors and has moved down 1 slot over the past week. Top Stocks NEM Newmont Corporation CMC Commercial Metals Co CDE Coeur Mining, Inc. *  *  *  * Top Movers Gainers HOLX +7.69% WDAY +7.25% FOXA +3.05% FOX +3.0% AXP +2.74% Losers BLDR -5.63% UBER -4.99% MHK -4.01% BG -3.92% AVGO -3.84% *  *  *  * Earnings Report Earnings Surprises GIS General Mills, Inc. Q1 $0.86 Beat by $0.04 *  *  *  * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here. You're receiving this e-mail at diansastroxz.forex@blogger.com. For questions about your account or to speak with customer service, call +1 (877) 697-6783 (U.S.), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized financial advice. © 2025 Chaikin Analytics, LLC. All rights reserved. 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