📈 Mag-7 concentration unwinds — trillions in drawdown

“Everybody's looking for the bubble... The reality today is NVIDIA trades at a lower price to earnings multiple than it did when it was $200 a share... There is not a dark GPU in the world today.”

“As we talked about last week, the S&P 493 are really struggling relative to the MAG 7 And there's a really kind of questionable outlook ahead for the vast majority of equity cap out there.”

“The MAG-7 was this set of correlated seven companies that sucked up all the attention, all the money, they moved in unison dollar for dollar. Now that that correlation has broken down, it allows you to ask this question, which is, what is the real MAG-X companies?”

“To me, it's a little bit like the end of the Max 7 And what we should do is almost think like, hey, what is the next? Remember when the Max 7 used to be Fang and then Fang++, and nobody talks about Fang anymore.”

“we have allowed the stock market to inflate past historical averages. What we have actually seen happen in the last week is what most people would call mean reversion. The stock market is still way above where it was last year, two years ago, three years ago. What has happened is that the forward multiples have compressed.”

“This was free money. This was like the stock market giving up free money. But why did this happen? This happened because it was very clear to me early on that the rhetoric had shifted to say, we care about MAGA, we care about people that have working class and middle class jobs. None of those folks are deeply invested in the asset economy the way maybe some of us are.”

“I think we've started the process of really, really taking a bunch of heat out of the asset markets, like equities. So we've taken trillions and trillions of dollars of wealth away. I think we're going to take trillions more.”

“And then the markets have just been going, I think, the craziest I've actually seen in 20 years of following the markets. And specifically, you're seeing the Mag-7 compressed towards the rest of the S&P 500”

“Now, if you go to the other chart, what this starts to show you though, is that MAG-7 is really priced to perfection. And so you have to believe that the world kind of stays the way that it is. Otherwise, you're going to have some amount of mean reversion. So I think the stock market on the margin is a little expensive and not particularly that attractive.”

“I think the Mag 7 is going to be the best performing asset. I'm taking the other side... the internal application of AI will allow these companies to have earnings growth that people will not be able to comprehend over the next couple of years.”

“The absolute dollar drawdown of the Mag-7 will be in the trillions of dollars... concentration of the top seven, eight companies in the indices is approaching 40 percent... these historic concentrations have generally foreshadowed a big drawdown. [Super prediction: Mag-8 representation on the S&P 500 shrinks below 30%.]”