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  • Martin Sosnoff

NASDAQ 100 Bounced 32%? Vas You Dere, Charlie?

At midyear, looking at sector weightings in the market, technology has blossomed to 28%. Unless brave enough to put serious assets into a handful of high kicking horses, like Microsoft, Apple, and Alphabet, chances are you were left at the post and underperformed.

NASDAQ 100 rose 32% during the first half but I didn’t see wealth managers pounding the table to overweight. No new Buffetts, putting 42% of their assets in one tech house, namely, Apple. Currently, sector weighting in the S&P 500 index bears no resemblance to past decades.

Aside from technology, an overwhelming 28%, healthcare and financials comprise 25% of assets. Trailing off to comparative small change are energy, utilities and consumer staples, hardly over 12%. I remember when stocks like American Telephone, Exxon Mobil and Coca-Cola were major factors in the market. No longer so! Utilities, materials and real estate have faded away.

To outperform, consider overweighting, 3 major sectors: Technology, financials, and healthcare over half the market's valuation. Microsoft and Apple cover tech. In financials I am warehousing Enterprise Products Partners, a 7% yielder. Naked in healthcare. My major divergence is in airlines, namely Delta and American. So far, both snappy performers.



Midyear Sector Weightings

Standard & Poor’s 500

____________________________________________________________________

Weighting Market

Percentage Value


Communication Services 8.37 35,478,847,244

Consumer Discretionary 10.63 45,067,478,965

Consumer Staples 6.64 28,151,045,543

Energy 4.10 17,932,266,434

Financials 12.39 52,516,984,540

Health Care 13.38 56,728,558,346

Industrials 8.47 35,900,561,808

Information Technology 28.18 119,467,715,603

Materials 2.49 10,575,091,899

Real Estate 2.48 10,518,394,278

Utilities 2.56 10,851,672,238

I am steeling myself to overweight tech by 50%, making it over a 40% sector concentration. Over the years, I’ve run anywhere from 100% to 150% long. Big eyes and normally plenty to choose from. Only a Federal Reserve Board chairman on the warpath to tamp down galloping. inflation drives me into cash. Our current FRB leader is an odd lot investor, making raises of a quarter to half point. Paul Volcker, in 1983, bumped rates up to 15%, a stand alone guy who did what was right for the country and wrong for Jimmy Hoffa, the man for inflating wages to no end.

This year’s first half, I’ve run pretty much 50% long, the other 50% in 2-year Treasuries and high-yield bonds, BB with five years duration. Although I own serious positions (10%) in Apple and Microsoft, Buffett coasts at 42% in Apple alone. Go! Warren.


My belief is portfolio managers are entitled to one rank spec where you put at least 10% of capital, I chose airlines, American, Delta, and pray daily. One stroke of the pen, doubling Microsoft and Apple, is on the table. (I’ll let you know.)

Starting with Apple and Microsoft at 12% weightings, half a dozen tech houses comprise half the NASDAQ 100 valuation. Forget about Texas instruments and Intel. They’re one percent, hasbeens, past decade’s favorites. If you’re wishy-washy on Apple and Microsoft, you don’t belong in the business.

Meanwhile, Dow Industrials make no sense and should be discarded as a tool for market measurement. Microsoft is double the weight of Apple while UnitedHealth is a 10% position. (They wanted more growth in their index.) Home Depot is a 6% position. Be careful what you’re measuring. It may have no relevance in the financial world.



Net, net, no matter how good your stock selection, being 50% invested is a heavy cross I chose to bear. Some 20% of my 50% is in three energy plays Occidental Petroleum, Williams Companies and Enterprise Products Partners. The last two are master limited partnerships that yield approximately 7%.

MLP’s viewed as bond surrogates, tend to move counter puntally with interest notes. I own Occidental Petroleum, too, which makes me weighted in energy. After all, you can’t put more than 20% of your capital in airlines, and expect to catch much deep sleep.



Although I follow Amazon, Meta Platforms, all high tech names. I don’t delude myself that I can sharp pencil their numbers. But, investors now must deal with the tech sector, like it or not. Consider, in 2001 big cap technology in the 10 largest market capitalization consisted of just Microsoft, Intel, IBM, Cisco and Oracle. Index weighting was just 6.1% of the S&P 500. Numero uno was General Electric at 4.1%. Apple as yet was struggling as a small computer house under Steve Jobs.

Wealth is an abstraction of entrepreneurial energy. Apple, some 20 years later, has grown into a $3 trillion market capitalization property. Technology now at 30% of the S&P 500 needs to be dealt with by investors of all stripes and colors. Short of leading a platoon of analysts into battle, the individual player needs to focus on NASDAQ 100 as his model.

I’ve over 20% of my holdings in Apple and Microsoft. Buffetts got around 42% socked away in Apple. But I’ve 20% of assets, an airline, an outlandish overweighting. Buffett still has more money than I do, but he’s a touch older. What’s so curious is nobody talks much about the NASDAQ 100 index. It’s like the investment world begins and ends with the S&P 500. Today, General Electric and General Motors are also rans.

Dow Industrials, after all, recent additions, and deletions look more and more like a growth index or at least the S&P 500 list. Management did what they did to stay competitive. After all said, they run a business and charge plenty for any historical stats you might request of them. The financial press is pretty disinterested. The Value Line Index, which I like no longer gets even a mention.


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