Hello, Reader.
The future has a rich history.
Throughout the millennia, various prophets, psychics, seers, shamans, and charlatans have proffered specific visions of the future. Occasionally, one of these seers saw the future correctly, but more often, their predictions strayed far from the mark.
Nevertheless, every New Year always tempts us to engage in a bit of future-gazing, no matter how fruitless and frivolous that gazing might prove to be. Here at the Smart Money, we could not – and did not – resist that temptation.
Of course, we have just entered February, and the New Year is squarely in our rearview mirror (along with some New Year’s resolutions, perhaps.) However, rest of the year still stretches out on the long road before us.
So, today, I want to share with you one of my top forecasts for the year ahead…
My Prediction Is…
- The “Magnificent Seven” stocks will underperform the broad stock market.
2023 was not a great year to not be one of the “Magnificent Seven” – those elite stocks that have produced almost all of the S&P 500’s gains this year. Specifically, those stocks are Apple, Alphabet, Amazon, NVIDIA, Tesla, Meta Platforms, and Microsoft.
The merely “Ordinary 493” stocks in the S&P, in comparison, have produced relatively minor gains.
But a reversal of fortunes might be underway.
The chart below shows the rolling three-month performance of the Mag 7 stocks, minus the rolling three-month performance of the other 493 stocks in the S&P 500 Index.
Whenever this line is above 0%, the Mag 7 stocks are outperforming the other 493 stocks in the S&P 500. Conversely, whenever this line is below 0%, the Mag 7 stocks are underperforming.
As you can see on the left side of the chart, the Mag 7 significantly outperformed throughout most of 2023. However, the line has been trending lower and fell below the 0% level shortly before the start of this year.
I expect this downtrend to continue as the richly valued Mag 7 stocks lose some of their luster. To be clear, I don’t expect these stocks to perform poorly this year, just less well than the overall market.
The Mag 7 stocks led the first phase of what will likely be a multiyear AI-focused rally. But now that Phase II of this rally is underway, I expect the Mag 7 stocks to hand off the baton to a variety of smaller, dynamic AI plays.
The AI Tipping Point
As the AI rally changes hand, artificial intelligence is still what Elon Musk calls “the most disruptive force in history.”
In 2024, we’re finally going to have to start reckoning with this “disruptive force” in ways most people aren’t prepared for.
Because we’ve reached a tipping point with AI…
One that calls for an AI Code Red.
I created a short presentation to help you prepare for what’s coming.
I’ll also show you where to uncover the biggest potential profits from the $15.7 trillion AI Revolution… by focusing on a virtually ignored sector that’s set to explode in the days and months ahead.
The sector I’ve identified offers a shot at the kind of explosive gains early investors captured at the beginning of the internet era.
Click here for all the details.
Eric
