Episode 149

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Published on:

11th Sep 2024

Is the US Stock Market Too Reliant on a Few Large Companies? | E149 Erik Baskin

Over the last couple of years, a key group of companies known as The Magnificent Seven has emerged. This group of high-performing and influential companies includes Alphabet, Amazon, Apple, Meta, Microsoft, NVIDIA, and Tesla. These companies are at the forefront of sectors such as artificial intelligence, electric vehicles, cloud computing, and digital services.

They have also been positively impacting much of the growth in the US stock market. Just last year in 2023, these 7 companies’ stocks grew 73% while the rest of the S&P 500 grew 8%. These companies are routinely showing up in many of the financial headlines and it got me wondering, is the US stock market too reliant on a few large companies?

So I reached out to my friend and fellow CPA Erik Baskin, to see what he thought. He had a ton to say. Of course, as any podcaster would, I asked if he would be up to record a conversation about it.

In this episode, Erik shares his thoughts about The Magnificient Seven’s impact on the stock market. We discuss if this concentration is new. We also explore what changes, if any, you should make to your investments because of this.

Erik and I also had this awesome conversation near the end of the episode about when being a super-saver doesn’t make sense anymore. It really had me rethinking a few things in my life currently.

Let’s get into it. I hope you enjoy my conversation with the Airman turned Financial Advisor…Erik Baskin.

Key Takeaways:

  • Has the US market become too reliant on a few large companies?
  • Is this kind of concentration new?
  • Equal weighted vs market cap
  • Impacts of investing only in the S&P 500
  • Should we be investing at all-time highs?
  • When being a super-saver doesn’t make sense anymore


Mentions:

Morning Star Portfolio X-Ray: https://www.morningstar.com/help-center/user-guide/x-ray-overview

Die with Zero: https://www.amazon.com/Die-Zero-Getting-Your-Money/dp/0358099765

The Gap and The Gain: https://www.amazon.com/Gap-Gain-Achievers-Happiness-Confidence/dp/1401964362


More of Erik:

Website: https://www.baskinfp.com/

BLUF Finance Podcast: https://www.baskinfp.com/podcast


More of The Struggle is Real:

Find show notes and more at https://www.tsirpodcast.com/

Connect with Justin on LinkedIn: https://www.linkedin.com/in/justinleepeters/

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FI Minded: Achieve Financial Independence & Have Fun Doing It
Achieve Financial Independence & Have Fun Doing It
Want to achieve financial independence without missing out on the fun?

FI Minded is for anyone who wants to achieve financial freedom, live life on their own terms, and, most importantly, enjoy the journey along the way!

Whether you’re just starting to think about financial independence or already deep into the process, FI Minded gives you the tools and inspiration to make FI a reality - without giving up the things you love.

Each episode, we’ll cover topics like:
*Financial Independence Strategies: Simple, actionable advice to reach FI faster (if that’s your goal).
*Work Optionality: Transitioning from the corporate grind (no more "one more year syndrome") to a life of freedom and flexibility.
*Lifestyle Design: How to build a life that aligns with your values, goals, and dreams.
*Stories from the FI Community: Real people sharing their journeys to FI and what they’ve learned.
*Fun with FI: How to save your future and enjoy your current life through CoastFI, mini-retirements, travel, or just making the most of your time.
*Fighting Burnout: Balancing saving for your future while staying mentally healthy.

Some of our past guests include:
Carl Jensen (1500 Days), Jeremy Schneider (Personal Finance Club), Nick Loper (Side Hustle Show), Andrew Giancola (The Personal Finance Podcast), Jordan Grumet (Earn & Invest), Jill Sirianni (Frugal Friends), Jacking Cummings-Koski (Catching Up to FI), Jesse Cramer (Personal Finance for Long-Term Investors), Diania Merriam (Optimal Finance Daily), Rachael Camp (Work Optional), Jillian Johnsrud (Retire Often), Sean Mullaney (FI Tax Guy), Joel Larsgaard (How to Money), Erin Lowry (Broke Millennial).
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