View All Podcasts

PODCAST

EP 29: The Magnificent Seven and Market Cap Weighted Indexing

Feb 1, 2024

At the end of 2023, the Magnificent 7 (Apple, Microsoft, Amazon, Google, NVIDIA, Meta, and Tesla) accounted for 28% of the S&P 500 index. With many of the largest exchange traded funds and mutual funds tracking the S&P 500 index, numerous investors have chosen to passively track the S&P 500 index with a significant portion of their portfolio. While the S&P 500 has generally been regarded as a very diversified index, many investors don’t understand the level of concentration that the S&P 500 has in the largest tech companies. On this episode, we discuss how an index holding 500 companies can end up with 28% of its allocation in only seven companies, the risks that this can present, and whether there are better approaches that can mitigate the risks. If you are interested in learning more about how to invest for long-term success, we think you’ll enjoy this episode. Thanks for listening! For more details on the Magnificent 7 and market cap weighting, check out our blog post covering the same topic at https://pw-wm.com/learn/investing/the-magnificent-seven-and-market-cap-weighted-indexing/.

Also Listen On:

Additional Resources:

For more details on certificates of deposit, check out our blog post covering the same topic.

About The Podcast Hosts

Steve & Nathan

Steve and Nathan have a passion for teaching others about finances and how to build the financial independence that is achievable with the proper planning. In their roles at Prairiewood Wealth Management, both Nathan and Steve focus on providing comprehensive financial advice to ensure their clients have a coordinated plan that covers all aspects of their finances including their investments, insurance, estate plan, and charitable giving goals.

As Certified Public Accountants (CPAs), both Nathan and Steve believe that one of the most overlooked aspects of financial advice is the tax impacts that result. Accordingly, a core focus of the advice they give centers on integrating tax strategy into the overall financial advising process.

Steve and Nathan are excited to share their knowledge through this podcast as well as their blog with the goal of helping you effectively manage your family’s wealth and ensure you have a comprehensive and coordinated plan for your future.

About Steve & Nathan