Never comfortable with the sobriquet of “Magnificent Seven” now showing its age. I’m down to three major properties. Namely Microsoft, Amazon and Alphabet (Google). Neutral on Apple and don’t own it.
Average life of a growth stock’s primacy is just five years. Classic properties like Polaroid and Xerox are now historical curiosities that shined in the 1950ies and sixties then fell apart.
The IBM franchise had to be saved by a Jewish operator. The pure Waspy act of the Watson family had smothered itself with commitles piled on top of each other.
It made swift reaction in the new computer sector impossible to manage effectively.
Polaroid’s headman, Edwin Land used to hold his annual meeting alfresco in a Boston Park setting. He’d bedazzle his passive herders with Polaroid's coming new products. The Japanese 8 mm camera makers like Nikon swept the market. Xerox management indulged in a bunch of shabby acquisitions, even a brokerage house. They proved way out of their depth and never recovered any momentum.
Today, I can’t puzzle out properties like Meta Platforms, Nvidia and Netflix so I steer clear of em. I cut back Microsoft and Amazon from 10% positions to 7% holdings. Not so smart as Buffett whose position in Apple at 22% of assets makes for turbulent money management.
Consider, traditional industrials whose earnings hang in do act better. I’m thinking of General Electric and Goldman Sachs.. You can sleep owning Enterprise Products Partners.
I’ve over 10% in MLP paper, which doesn’t match “Mag seven” flashiness. The penalty for staying in flashy paper can be an overnight haircut of 10% to 20%. Look at Meta Platforms andNvidia. You don’t want to be around on the day they red-dog Apple, easily a 15% down day. So far, the rally in oil stocks is helping Berkshire.
I missed the bank rally. Thirty-odd years ago, JP Morgan turned me down on a mortgage for my Hudson River spread. They claimed it was too much a one-of-a-kind property. So was Mar-A-Lago when it sold to Trump for $15 million decades ago.
There will always be more banks than bankers in the world. Look what they did to them in the 2008–’09 mortgage fiasco. Bankers financed properties with mythological asset coverage. Total writedown of billions upon billions ensued.
Between 15% and 20% below recent highs sit Apple and Meta with Tesla a punching bag. Amazon, Microsoft and Nvidia hang in. Net, net the foolish concept of the Magnificent Seven has worn thin.
Still standing tall are Netflix, Nvidia, Microsoft, Amazon, and Alphabet. On the value side, GE doubled over 12-month lows and you spent few sleepless nights.
Here’s my definition of the Triple Top. What the market fought for over 14 years and then broke out of, to everyone’s surprise.
When I looked at this listing of the Top 25 stocks and the S&P 500 nearly a decade ago, I was shocked at how few names held their primacy. Yes! Microsoft was numero dos. General Electric had fallen out of bed like Exxon and Pfizer. Today Pfizer holds no new drugs. Pretty much dead in the water. Citigroup then number five. Gimme a break. This is an also-ran bank. Intel is near disaster with skimpy new product development.
AIG number seven practically bankrupted itself in the mortgage meltdown over a decade ago. This list is sprinkled with banks. I dunno know why. The days of stocks prevailing for a generation seems history. As I write this, AIG is ticking at a new high for the year.
John Akers took early retirement from IBM and was replaced by Lou Gerstner, an outsider and decidedly Jewish. Gerstner was a hands-on operator, who peeled away layers of management with no interference from the Watsons.
Years later, despite its shrinking earnings, IBM shareholders list remained largely intact. Passive holders with nowhere to go. No new ideas unless you could sift through much data, you were just a well-tailored anachronism.
Years later, Tom Watson related to a sailing buddy in two sentences that IBM for years had the business all to themselves. Watson built up six layers of management and could never react fast enough to change.
IBM changed and became a comeback kid. To this day I eschew all such starched white collar properties. Their headmen exuded antisemitism. Management’s events were anti Semetic and wouldn’t hire Jewish boys out of college as trainees. I had to subway to Wall Street to make a living.