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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About the Podcast

FI Minded - Financial Independence, Early Retirement & Lifestyle Design
Achieve Financial Independence & Have Fun Doing It
Pursuing financial independence, financial freedom, or early retirement often leads to the same questions: How do I become financially independent? How much should I save? What happens after I reach FI?

FI Minded helps you use money to create more freedom, without turning your entire life into a financial optimization project.

Host Justin Peters explores the decisions behind building a flexible, work-optional life, from reaching financial independence and navigating Coast FI and Slow FI to spending your money, changing careers, stepping away from work, and figuring out what comes after FI.

Each episode combines practical personal finance with conversations about early retirement, lifestyle design, work, spending, healthcare, self-employment, and life after financial independence. The goal isn't simply to reach FI as quickly as possible. It's to make progress toward financial freedom while actually enjoying your life along the way.

On FI Minded, you'll learn how to:
- Reach financial independence without burning out
- Build a flexible, work-optional lifestyle
- Navigate Coast FI, Slow FI, and other paths to FI
- Make smarter decisions about spending and saving
- Prepare financially and emotionally for early retirement
- Figure out what life can look like after financial independence
- Think through the tradeoffs behind major money and lifestyle decisions
- Make progress toward financial independence while actually living your life.

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), Rachael Camp (Work Optional), Jillian Johnsrud (Retire Often), Sean Mullaney (FI Tax Guy), Jill Sirianni (Frugal Friends), Jackie Cummings-Koski (Catching Up to FI), Joel Larsgaard (How to Money), Cody Garrett (Measure Twice), Jesse Cramer (Personal Finance for Long-Term Investors), Jess (The Fioneers), Chris Hutchins (All The Hacks), Diania Merriam (EconoMe), Andy Hill (Marriage Kids Money), Fritz Gilbert (Retirement Manifesto), Maggie Tucker (Inside Out Money), Cody Berman (The Financial Independence Show), Joe Saul-Sehy (Stacking Benjamins), Doug Cunnington (Mile High FI), and and others helping you rethink how to approach financial independence.
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