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Senior Investment Strategist at Charles Schwab in Kevin Gordon sounded the alarm concerning possible volatility in the "Magnificent Seven" equities as we march into 2025. Over the fluctuation in performances from big-cap tech firms that still dominate the S&P 500, he spoke extensively in an interview with CNBC.Gordon pointed out that although Nvidia (NASDAQ:NVDA) was maybe the second-best performer in the past year, Microsoft (NASDAQ:MSFT) rated lower than 200th among S&P 500 stocks, showing notable variation within the group.
Investors should take the different findings into account while seeing the organization as a monolithic block.The S&P 500 climbed 23.22% in 2024 while almost half of the gains came from the Magnificent Seven, contributing a whopping $7 trillion in market value. Together with the top 10 companies, they now make nearly 40% of the weight of the index.
Gordon encouraged investors to recognize the higher risk these stocks create even if he believes maintaining exposure to the wider S&P 500 is still wise. "These swings can get much larger," he said, stressing a more concentrated strategy for portfolio management in 2025.
This article first appeared on GuruFocus.