The idea that investors should steer clear of equities because the market is concentrated in the Magnificent 7 tech stocks is misguided, Ritholtz Wealth Management CEO Josh Brown said in a recent blog post.
"Of all the reasons not to remain invested in stocks over the last three years, the 'it’s only seven stocks holding up the market' trope has been the dumbest one," Brown wrote.
There may be valid reasons to maintain a diversified portfolio, he said, citing valuation worries, tariffs, inflation, geopolitics and the national debt. Rants by "anti-passive" bears against Mag 7 dominance in indexes and ETFs, however, are not based in reality, he said.
"It’s just not true that only seven stocks are driving markets higher and that, should they stumble, we’d be in for a world of pain. They all stumbled this year," Brown wrote, noting middling or worse stock performance among several top tech names. "Despite all that mega-cap wreckage at various points during the year, the S&P 500 index’s 2025 price return is around 17% with just a couple weeks to go."
Only one of the 35 stocks in the S&P 500 that reached new 52-week highs on Friday is a tech company, he noted.
Brown also noted that Eli Lilly and Berkshire Hathaway — both big non-tech companies, neither benefiting from an indexing bubble — joined the "Trillion Dollar Market Cap Club" this year. Moreover, the S&P 500 Equal Weight Index recently hit a new high for the year, as has a cap-weighted S&P 500 ETF that the Mag 7 dominate.
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