Yes, Geoff, this was a huge turning point last year.
So you mentioned the Magnificent Seven. This is a name that was coined by Michael Hartnett, who’s an investment strategist at Bank of America. He allowed that he’s a fan of this Western movie from 1960 starring Yul Brynner and Eli Wallach, which is why he named them.
But the seven stocks are Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla. And as you say, these are tech companies, most of which are tied to A.I. or interested in A.I. or doing work on A.I. I guess Tesla is kind of the exception to that. Nvidia, at the other extreme, this is a company that is designing most of the microchips that are used in the supercomputers that are powering the technology that allows companies to use A.I.
So they have really outperformed the market. Last year, the S&P 500 was up 24 percent. Those seven stocks, they rose by more than 100 percent last year. So they have been carrying a lot of the weight here. And there are a number of reasons for that. A.I. is part of it.
Another just has to do with the fact that these are companies that are ingrained in our lives, that we use every day, that they would have staying power if there were going to be some sort of economic downturn. And, finally, they have a lot of cash on hand. We’re at a point where interest rates are higher than they were for a really long time.
A lot of companies, if they want to expand, have to borrow money. They’d have to borrow money at a higher interest rate. These are seven companies that wouldn’t have to do that because they have so much money on hand, Geoff.