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ASR in FT: ‘T-bill and chill’ strategy challenges stock investors

9th OCT. 2023

Jennifer Hughes discusses in her recent article for the FT how the rise in bond yields means there are more alternatives to betting on the fortunes of the Magnificent Seven tech giants.

The seven make up a remarkable 28 per cent of the market capitalisation of the S&P 500. The top 50 stocks account for 57 per cent. Concentration on this scale is extremely rare. There are just two other occasions — July 1932 and November 2000 — in the past 100 years where the biggest 50 stocks have made up so much of overall US market value, according to Absolute Strategy Research.

ASR co-founder Ian Harnett views this year’s stock market performances as an end-of-cycle moment showing investors have been prepared to drop caution in favour of chasing more of the same — that is, the tech growth theme that has dominated in recent years, however hard it is to justify the valuations.

“Even if you think these companies are going to be structurally brilliant for a long time, you have to remember that the people they are trying to sell things to, still face cyclical economic pressures,” he says.

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