Chart Talk: March 5, 2025

Over the past few years, the stock market has been marked by a striking divergence between a handful of dominant technology-driven stocks and the broader equity market. This divergence is most clearly illustrated by comparing the performance of the Magnificent 7 - a group of the largest and most influential technology and growth stocks—and the Invesco S&P 500 Equal Weight ETF (RSP), which weights each company within the S&P 500 equally.

As the Magnificent 7 (Apple, Microsoft, Amazon, Nvidia, Alphabet, Meta, and Tesla) has surged, their dominance has propelled cap-weighted indices like the S&P 500 (SPX) and Nasdaq 100 (NDX) to new highs. Meanwhile, the RSP ETF, which reflects the performance of the average S&P 500 stock rather than being skewed toward a few giants, has significantly lagged.

As is illustrated from the chart below, since the start of the year, we have been seeing a shift in sentiment in that the RSP (Invesco S&P 500 Equal Weight ETF) has risen 0.05% drastically outperforming the Roundhill Magnificent Seven ETF (MAGS) which has dropped 9.5%.

Despite the recent volatility in the equity market, the fact that it remains within a few percentage points of its all-time high, despite negative sentiment, implies that investors WANT to be invested.? That said, we believe investors will be divided between those who believe tax cuts and deregulation will continue to be a positive force on the economy and stock market as opposed to those that worry about inflation, market volatility and the unorthodox policies of the Trump Administration.? As long as the consumer and labor market remain strong, there will be a floor in the stock market.? Should future data imply otherwise, so will the support for stocks at these levels.??

“This presentation is not an offer or solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable, but its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. Fagan portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.

Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions.?Past performance results are not indicative of future results.”