The percent of market cap that the “magnificent 7” represent is at an all-time high, and they accounted for most of the equity market gains in 2023. Another sign of concentration: last year also saw the second highest percentage of S&P 500 stocks underperforming the index since 1980 (72% underperformed vs 52% average). But without judicial brakes on them, the strong are getting stronger and I see little reason, other than valuations that become too high relative to the market, that this should change. While megacap stocks look increasingly expensive relative to the market, after adjusting for their higher earnings growth expectations they don’t look nearly as overpriced. The challenge is everyone seems to agree; this is a very crowded trade.
- Date Posted:
- December 15, 2023
GLP-1 produces all sorts of cascading effects; the human body has receptors for it not only in the gut but also in the liver, muscles, and brain. Studies keep turning up surprises: some of the medications appear to reduce the incidence of heart attacks and strokes, slow the progression of kidney disease, and shrink dangerous fat deposits in the liver. People who take them have reported diminished cravings for alcohol and tobacco; some have reported feeling less compelled to gamble, compulsively pick at their skin, and engage in other addictive behaviors. “It’s an unprecedented situation,” Christian Hendershot, a University of North Carolina clinical psychologist who is studying semaglutide’s effect on alcohol use, told me. “The anecdotal reports of people saying these drugs are helping them cut back on drinking or smoking have come much faster than our clinical studies can confirm.” Lizard venom helped to turn an obscure hormone into potent diabetes medications, and then into the most promising weight-loss treatments in history. We’re still discovering how much they’ll change our lives.