So as I’m sure many are aware a good portion of the growth in SP500 has been driven by the mag6/7 and the companies that support it.
My question is: If the majority of growth in an index that is supposed to represent the broader performance of the market is localized to the tech sector, is it still a safe(r) more reliable investment than individual stock picks in the tech sector?
Will we see a market correction eventually as small and midsized cap companies aren’t performing nearly as well as they are being portrayed? I just see everyone talking about hitting 5k for the first time but I’m like can we really consider this still an effective tool at measuring the broader performance of the market it 6/7 companies account for a min of 25% of total cap. I mean shouldn’t we be normalizing the growth to reflect this? I thought the whole point was to measure the performance/health of 500 companies not 30 or less like the dow.
I guess the crux of my question is can we really say that investing in index funds like VOO or VTI is safe(r) or as safe of a bet as it used to be 20/30 years ago? What happens if one of the mag 6/7 goes down? We can’t expect the US to continue trade tariff policies and funding/engaging in armed conflicts just to keep a company above foreign competition.
