Obsidian Market Update 11/11/2023
Economic Update
Market Corrections and The Magnificent Seven
In 1960, some of Hollywood’s biggest actors—Steve McQueen, Yul Brenner, Charles Bronson, and James Coburn—starred in The Magnificent Seven. In today’s financial world, The Magnificent Seven consists of seven of Silicon Valley’s biggest actors: Apple, Amazon, Alphabet (Google’s parent company), Meta Platforms (parent of Facebook), Microsoft, Nvidia and Tesla.
A Market Correction
On October 27 of this year, the S&P 500 experienced a market correction. In other words, the S&P 500 Index fell by more than 10% from its July high. (A market enters bear territory when it falls between 10% and 20%.)
Markets retreat when there are fewer buyers for equity than there are sellers. This drop in demand can happen for several reasons, such as an increase in the cost of borrowing (credit) or oil. While these two factors were putting pressure on the market, the third quarter increase in U.S. gross domestic product was the strongest since 2021.
Here’s where The Magnificent Seven enter the picture. The stocks of these seven companies are heavyweights that can mute or amplify what’s happening to the prices of all the other stocks in the S&P 500. For example, the S&P index fell while the stocks of this group increased an average of 92% (as of November 6).
- Apple up 35.61%
- Amazon up 65.44%
- Alphabet up 46.41%
- Meta up 161.65%
- Microsoft up 47.30%
- Nvidia up 210.44%
- Tesla up 81.42%
Not long after the S&P 500 slipped into correction territory, the market rallied in multiple sectors beyond The Magnificent Seven. For example, stocks in the real estate sector increased 8.5%, financials 7.4% and consumer discretionary 7.2%. Does the post-Halloween rally signal that investor confidence will continue through the rest of the year? As always, we’ll keep a close eye on performance across all market sectors and monitor multiple economic indicators both in the U.S. and worldwide.
From long experience we’ve found that creating an investment plan based on your goals, developing a diverse portfolio and maintaining a long-term and disciplined perspective is the most effective way to generate wealth. We also know that when markets are volatile, it can be difficult to maintain perspective. Please don’t hesitate to contact us if you have any questions about your portfolio.
Lifestyle
Veterans Day
The eleventh hour of the eleventh day of the eleventh month of 1918 marked the end to what H.G. Wells called “the war to end all wars,” and in 1939, the U.S. Congress made the 11th of November a legal holiday to be known as “Armistice Day.”
According to the U.S. Census Bureau, in 2022 there were 16.2 million veterans in the U.S. According to the Bureau’s 2020 report:
- 41 million Americans have served, and more than 16 million served in World War II alone.
- The median age of veterans in 2018 was 65 years and fewer than 500,000 World War II veterans were still living.
- The percentage of women veterans is growing and by 2020 is projected to rise to 17 percent.
The Veterans Day Ceremony and Wreath Presentation will take place today at 3:00pm at the Korean War Veterans Memorial, and there are observances of all kinds happening throughout the DMV.
To all of you who are veterans, we thank you for service and your sacrifice.
How We Help
Who’s Your Trusted Contact?
As financial advisors, we occasionally see something related to a client’s account that concerns us. If our multiple attempts to contact that client (via telephone and email) are unsuccessful, we’ll reach out to his or her trusted contact.
In one case we noticed a series of checks for large amounts written from Helen’s* account. After trying multiple times to contact her, we reached out to Helen’s trusted contact, her son. After speaking with him about our concern—and without mentioning any dollar amounts—he spoke to his mother and learned that a contractor had promised Helen the moon yet repeatedly failed to deliver.
Your trusted contact is the person you give us permission to use as a messenger when we can’t reach you. We don’t share account balances, and we will ask you to update or confirm your trusted contact during your Review Meetings.
If you’d like to know more about how we use trusted contacts or whose name you’ve provided, just give us a call.
*We value our clients’ confidentiality, so Helen is a fictious name.
Advisory Services offered through Obsidian Personal Planning Solutions, LLC. Securities are offered through Triad Advisors, member