Is It Different This Time? (December 2023)

A Report from the Value Equities Investment Committee | PDF

For the better part of the past seven years, the broad indexes have been driven by the strength of a handful of mega-cap technology-oriented businesses, namely: Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla. The narrow focus is beginning to cause some investors to question if there has been a permanent shift in the investment environment, a shift that is so noticeably different from the past that we need to discard the traditional rules of investing and conclude that “this time is different.” That last phrase is credited to Sir John Templeton, investor and philanthropist, who often stated that those are the four most dangerous words for investors. Heeding Sir John’s advice, one should be wary of assuming that current market conditions and trends will persist indefinitely. The failure to recognize underlying similarities to past events may lead to irrational expectations and imprudent investment decisions. This Value Equity Insights report strives to offer some perspective on the bifurcation that has occurred in the current market and provide some historical context in order to help investors navigate the investment landscape more safely.


The market cap-weighted indexes, such as the S&P 500, have been heavily influenced of late by the mega-cap names, and more specifically, the seven technology-oriented businesses mentioned earlier which have been referred to in the media as the Magnificent Seven (M7) due to their recent stellar returns. While the M7 businesses have benefited from a handful of trends centered around a more connected, intelligent, and mobile society (not to mention the COVID lockdowns), their relative stock performance has created a bifurcated and very concentrated market, one that has parallels to many of the past periods of excessive exuberance.

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