“David talks a lot about the current top-heaviness of the S&P 500 and how a day of reckoning is inevitable. Is it possible for the few leaders to come down while the rest of the pack goes up? Or is everything overvalued currently to varying degrees, and so when the top drops, the rest always follow? I guess the heart of my question is, should we all be bracing for a correction across most of our portfolio regardless of our holdings?”
~ Ryan M.
When technology is over 31% of the index and communication services is another 9-10%, it is not likely that this segment can correct and have the index not drop.  But as we saw in one of the most famous bear markets of all time (March 2000-October 2002), value and growth, the Dow and the Nasdaq, certain sectors, etc., can all behave very differently from one another.  My own opinion is those who own the most expensive stuff, including index investors, have the most exposure.  But no, I do not believe the impact of over-valued things will be the same with not over-valued things.  I think the timing and attribution here are all unknowable.  And I think timers will deeply regret their obstinance (that is permanently true).
~ David L. Bahnsen, June 24, 2024
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