Hello Investors!
Last week the markets were a roller coaster, with most indexes trading lower until Friday, when suddenly everyone decided it was time to "buy the dip." Speaking of buying the dip, I just put up a video on How to ACTUALLY Buy the Dip. In it, I show you the framework that I use to decide whether or not now is a good time to invest more money into stocks. Check it out when you get a chance.
Now let's talk markets!
Market Update
The stock market has given back most of its gains for the year, with the S&P 500 now up only 1.4%, and the tech-heavy Nasdaq now down 0.6%. However, most of the decline was driven by tech stocks. Nvidia is down over 10% from its recent high, Tesla is down closer to 25%, and Palantir has lost about a third of its value. Since many Tech stocks including the Mag 7 are so large, they tend to drive the rest of the market when they go up or down. Non-tech stocks on the other hand are having a great year so far.
Here's a chart showing the S&P 500 compared to the Tech, Healthcare, and Financial sectors:
While Technology stocks are down 3% for the year, other sectors are up 8%+. Depending on your goals, you may want to consider reducing your exposure to Tech stocks. One easy way to do this is to switch from a traditional Market Cap Weighted index to an Equal Weight index. This type of investment ensures you have equal exposure to all stocks in the index, preventing you from becoming overexposed to one or more companies. My favorite equal weight S&P 500 ETF is ticker EWSP maintained by iShares (not financial advice).
Coming Up This Week
This week a number of companies are reporting earnings, including Crowdstrike (CRWD), Target (TGT) and Broadcom (AVGO). I will be paying most attention to Target, as the retailer will give important signals about how consumers are spending their money among persistent inflation and constant threats of tariffs.
That's all for now, feel free to reply directly to this email if you have any questions or follow ups!
Until next time.
-Brian
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