|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.