Current mythology claims âjust a handful of stocksâ took the S&P 500 to new highs. Supposedly AI hype driving the âMagnificent 7â Tech stocks in a 2000-era bubblicious redux. Wrong. That just grasps at straws to dismiss the bull market so few foresaw. No, this bull market is a magnificently broad celebration of normalcyâs return. That so few fathom that means it has far further to run. Let me show you.
Sure, the Magnificent 7 boomed. That much is true. Alphabet (Googleâs parent), Amazon, Apple, Meta (Facebookâs parent), Microsoft, Nvidia and Teslaâraced like Secretariat since 2022âs bear market bottom. And all but Tesla are Tech or Tech-like with AI exposure.
But every bull market has leaders and laggards. Normally, categories of stocks falling the most in a bear market bounce biggest early in the next bull. Guess what? Tech and Tech-like stocks led 2022âs decline downward. Techâs big bounce sinceâwhich isnât limited to the Magnificent 7âshouldnât surprise.
But itâs not just Tech. How to know that? Look where Tech isnât The Magnificent 7 are US-based, part of Americaâs hugely and globally outsized 30% Tech weight. But tech sparse overseas markets are soaring with industrials, financials–even utilitiesâ¦but almost no tech. In local currencies to avoid skew, markets hitting total return all-time highs this year include: Australiaâs ASX 200, Britainâs FTSE 100, the MSCI Denmark, Franceâs CAC 40, Germanyâs DAX, the MSCI India, Irelandâs ISEQ, Italyâs MIB, Japanâs TOPIX, Netherlandâs AEX and Spainâs IBEX. All! Repeat, all! Just the Magnificent 7? Got it? Magnitudes vary, but this magnificent market, while not everywhere, is significantly global and far broader than fantasized.
Or consider simply: In 2023, nearly 75% of the MSCI Worldâs more than 1,400 stocks rose. Fully 548 outperformed the Worldâs 23.8% return! How wiseacre pundits morph that into some seven-stock, bubble-like myth is a prime lesson in âThe Pessimism of Disbelief.“
Sir John Templeton famously said, âBull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.â Naysayers seemingly think we fast flipped from pessimism to euphoria. Remember 2000âs bubble? Or, even 2021âs slight froth? IPOs flooded the late 1990âs markets. Myriad SPAC offering dotted 2021. This is natural: Euphoria means firm founders and owners crave gorging at the IPO dessert buffet. Where are the IPOs now? Nowhere. (As I coined decades ago, IPO really means, âItâs Probably Overpriced.)
We arenât near euphoria–which all these âMagnificent 7â doubts prove. That âItâs Justâ skeptical, doubt-ish talk never flourishes in bubbles. Sure didnât in 2000. It takes a long, long time for pessimism to warm into euphoria. We may be straddling somewhere between skepticism and optimism now.
We have a massively misunderstood return of normal, pre-pandemic economic growth and inflation rates. Before 2020âs lockdown-driven collapse, America routinely grew between 1.7% and 2.9% annually. The world? Roughly 3%. Then in 2020, COVID-ized, all manner of economic data went wildly whacko, initially imploding–then, bouncing back bigtime. IMF data show American and global 2021 growth at a red-hot 5.9% and 6.3%, respectively. They then reverted in 2022 to historically normal 2.1% and 3.5%, with 2023 final estimates in midst those pre-pandemic norms. Itâs just a return from a hyper fast 2021âto the old normal.
Maybe past growth rates feel scary. But the old normal was fantastic for stocks, fostering healthy sales and profits against nonstop griping that the economy wasnât good enough. It was good enough to deliver historyâs longest-ever bull market from 2009 â 2020. And is easily enough for this magnificent bull market to run now.
Ken Fisher is the founder and executive chairman of Fisher Investments, a four-time New York Times bestselling author, and regular columnist in 21 countries globally.