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What a Week Thumbnail

What a Week

Investing Market Volatility

What a week! The Supreme Court handed down two landmark civil rights decisions, today landed on Juneteenth, and Father’s Day is around the corner.

Again, we had more ups and downs in the markets, as optimism around reopening the economy was stifled by news of record high numbers of new coronavirus cases in twelve states, including California.

Speaking of markets, they’re looking a little top-heavy these days, with the FAANG (Facebook, Amazon, Apple, Netflix and Alphabet, formerly Google) stocks continuing to sink their teeth into a greater share of the market pie (sorry for the bad pun - we couldn’t resist a Dad joke with Father’s Day approaching).

There may be a temptation to call this “a new normal,” thinking we cannot rely on what we’ve historically known about markets. But this isn’t the first time markets have been dominated by a handful of the largest companies with a tech giant at the helm. In 1967, IBM represented a larger portion of the market than Apple did at the end of last year (5.8% vs. 4.1%). It’s not an unusual phenomenon for the top ten stocks to make up 20% of the total market capitalization like they do today. In fact, historically the top ten companies have made up far more than 20%, reaching over 35% of the pie back in the 1920s.
Some companies (like AT&T, GM, GE, IBM and Exxon) have managed to stay on top for long periods of time, much like the FAANG stocks of recent years. So is this a new normal, or an old normal? For more, check out Dimensional Fund Advisors’ recent blog post, Large and In Charge? Giant Firms atop Market Is Nothing New.

Now, on to the weekend! If anyone is at a loss for how to celebrate Father’s Day in these confusing coronavirus times, we’ve got you covered with 15 Fun Father's Day Activities to Spend Some Quality Time With Dad. We will be celebrating the Dads in our families with two activities that made the list – firing up that grill for a little socially distant backyard picnic with family. And, for a great selection of jokes to impress your dad, check out Epic Dad Jokes.
Chart Source: Dimensional, using data from CRSP and Compustat. Includes all US common stocks. Largest stocks identified at the end of each calendar year by sorting stocks on market capitalization. CRSP and Compustat data provided by the Center for Research in Security Prices, University of Chicago.