By Lawrence G. McMillan
It is said that a bull market climbs a Wall of Worry. In the modern context, this statement remains true of course, but also encompasses $VIX. In the past weeks, we have published a few articles detailing just how many articles are circulating in the financial media about the forthcoming $VIX explosion. That hasn’t happened yet, by the way, and probably won’t until people get more complacent about the current price of $VIX (and the stock market, as well). Of course, the Wall of Worry extends to other sectors of the market.
Here’s a relatively new one. The S&P 500 is too concentrated – not just in a few stocks (like the old “Nifty Fifty” from the 1970’s) but in just two stocks. This is an excerpt from a yahoo.com article by Brian Sozzi:
“Apple (AAPL) and Nvidia (NVDA) have truly become the straws that stir the stock market’s drink. The S&P 500 has never been more concentrated in just two stocks than it is today, Creative Planning president Peter Mallouk pointed out. Nvidia and Apple represent over 15% of the index (see chart right).
That percentage dusts the 9.1% concentration seen for Microsoft (MSFT) and General Electric (GE) in the lead‑up to the dot‑com bust.”
– Brian Sozzi is Yahoo Finance’s Executive Editor
The implication being that this is somehow unsustainable for the market. Well the highest on record until 2019, according to that chart, was back in 1982. Yet, that record was exceeded in 2019 and every year since. So what makes the current reading a problem? Perhaps it’s a problem for the combined price of NVDA and AAPL, but that was not the article’s implication...
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