The Gravity of Giants
The ‘Magnificent Seven’
The Great Market Divide
- These seven companies are growing way faster than the other 493
- The “Giants” are carrying the weight of the entire market
The High Cost of Growth
- The Mag 7 prices are highly volatile, fluctuating far more than the typical stock
- Rapid growth means investors are in for a much rougher ride
Nvidia’s Insane Momentum
- The aggressive momentum (blue) recently surpassed the long-term average (black)
- This illustrates Nvidia has stepped into “another gear,” experiencing extremely rapid growth
Pushing Mathematical Limits
- The price line is skirting the upper limit of its “normal” price range
- This means the stock may be extended beyond normal levels
Entering the Danger Zone
- An RSI above 70 signals the stock is “red hot” and overbought
- Stocks often crash soon after reaching such high temperatures
The Crash
- This graph reveals how much money investors stand to lose during their “bad” periods
- Although they experience deep drops, these stocks quickly bounce back
Correlation Heatmap
- These seven stocks all tend to go up and down all at the same time
- One failing company can bring them all crashing down together
Monthly Performance Heatmap
- This graph indicates which months saw “blue” (good) or “red” (bad) returns
- The patterns show that the growth isn’t random but happens in bursts
Moving Faster than the Market
- These stocks respond more strongly to market news than the S&P 500
- As the market moves an inch, these stocks move a mile
High Stakes, High Returns
- You stand to make substantially more money, but you take substantially greater risks of losing money
- The Mag 7 are outliers on the graph, distant from “ordinary” stocks