Wednesday, July 17, 2024

A Dangerously Narrow Bull Market?

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Is This Bull Market Dangerously Narrow?

Matt Benjamin, Senior Markets Expert, The Oxford Club

Matt Benjamin

Sure, we're in a bull market - but it's far too narrow.

Anyone who's been reading the financial press has heard that complaint ad nauseam this year.

The idea is this...

Yes, this market rally - which has sent the S&P 500 Index soaring 58% since October 2022 - is impressive by historical standards. Yet it has been led by a tiny group of mega-tech stocks associated with AI technology, with little in the way of gains outside of that elite group.

Worse, that narrowness sets the market up for a major correction.

One earnings miss by, say, chipmaker Nvidia (Nasdaq: NVDA) - which is up a whopping 166% this year alone - could take this whole house of cards down with it.

(In fact, Nvidia is already down 10% over the past week.)

There is certainly some truth to this depiction of the bull market. But the reality is much more nuanced - and the outlook far more positive - than the naysayers would have you believe.

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