2024 - Halftime Report

Half the year is gone so let’s look at the S&P 500 year to date, look back in time, and draw some lessons.

For the first half of 2024, the S&P 500 Total Return was +15.3% and the Price Return was +14.5% so for readability and general discussion, let’s just say the S&P 500 was up 15% through the first half of 2024.

The top 5 contributors to that 15% return were Microsoft (MSFT), NVIDIA (NVDA), Apple (AAPL), Amazon (AMZN) and Meta (META). Those 5 stocks account for 60% of the first half of 2024 return on the S&P 500

The top losers for the same time period, meaning they subtracted from the return or were the “bottom contributors”, were Tesla (TSLA), Intel Corp (INTC), Boeing (BA), Lululemon (LULU), McDonalds (MCD), and Salesforce (CRM)

Now for a little context, the Invesco S&P 500 Equal Weight ETF (RSP) returned +4.1% through the first half. Quite a stark difference.

There are 406 companies with a market cap below $100b and the top 25 market cap companies are worth the same as the rest of the entire index combined!

Now here comes a little more context. In 2000 the top 5 were Microsoft, ExxonMobil, Cisco, Walmart, and General Electric. Today, only one of those top market cap companies remains in the top 5…Microsoft

Here comes more context…at the end of 2022, here were the top and bottom contributors to the full calendar year S&P 500 return.

Top 5 – ExxonMobil (XOM), Chevron (CVX), Merck (MRK), Eli Lilly (LLY), and ConocoPhillips (COP).

Bottom 5 – Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), Google/Alphabet (GOOGL) and Tesla (TSLA).

See what I did there?

Here’s my unfiltered opinion - Concentrated investors are going see serious and possibly irreparable damage done to their portfolios in the next 20% down market…which will come, I promise, but no one will know when.

Here’s my straightforward advice for those concentrated investors – You won! Congratulations, you’ve made money and increased your net worth. Now, why not adopt the mindset and outlook that the 20% selloff is about to start now, fix that concentration, take your profits, and have a more diversified portfolio?

Now here’s the probable unfiltered and straightforward answer…greed, overconfidence, and the “I don’t want to pay taxes” reason. All of those are your enemy disguised as your friend and embedded in your ego.

Just remember, no one has ever gone broke taking a profit.