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Is This the "Nifty Fifty" All Over Again?

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profittrends.com

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Tue, Feb 23, 2021 07:55 PM

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In the 1970s, the 50 stocks that pushed the economy forward suffered collapses. Will we see history

In the 1970s, the 50 stocks that pushed the economy forward suffered collapses. Will we see history repeat itself? [Profit Trends]( SPONSORED [This Device Will Make American Manufacturing Great Again]( [Image] See the device in the box on this table here? It’s the size of a desktop computer... and functionally has the same manufacturing power as the assembly line. It’s creating 63 million new factory jobs... right here in America. MADE IN AMERICA is back! And one small little-known company is at the forefront of this $100 TRILLION shift. [Click here for full details.]( [MARKET TRENDS]( Is This the "Nifty Fifty" All Over Again? Matthew Carr | Chief Trends Strategist | The Oxford Club [Matthew Carr] Since the [COVID-19 pandemic]( began, eight S&P 500 Index companies have increased more than $100 billion in value. So while large swaths of the economy withered and struggled over the last year, these select companies saw their business - and fortunes - boom. On the surface, we can argue that this is a celebration of American innovation and that these standouts were in the perfect position to thrive. But underneath that, there are some troubling currents. Investors are facing a situation they haven't seen in almost a half-century. And the potential for something tragic to unfold is steadily rising. The $2 Trillion Club Pros and Cons For the long, seemingly endless months of the pandemic - now stretching two winters - we've highlighted the profit potential of tech. [Technology]( is what has kept the economy moving forward. And in today's world, it has been a necessary distraction. On top of that, Americans have spent billions of dollars on all of the peripherals needed to exist in our largely virtual world over the past year. We see this reliance on tech in the dramatic rise of the Nasdaq Composite over the past year. [Nasdaq Demolishes Other Indexes] The tech-heavy index has easily eclipsed the performance of the Dow Jones Industrial Average and the S&P 500. And when we look at the companies that have seen the largest increases in their [market capitalizations]( over the past year, we see they are all Nasdaq-listed companies. [Largest Market Cap Increases Since Feb 19, 2020] Apple (Nasdaq: AAPL) became the first $2 trillion company, its market cap ballooning to more than $764 billion since mid-February 2020. Tesla (Nasdaq: TSLA) CEO Elon Musk was crowned the wealthiest person on the planet as the company's market cap roared $581 billion higher. And Amazon (Nasdaq: AMZN) and Microsoft (Nasdaq: MSFT) are well on their way to becoming the next members of the $2 trillion club after each company saw its market cap rise more than $390 billion over the past year. Many of these are next-generation blue chips that every investor should probably have exposure to. But we should all be aware of another aspect of these gains... SPONSORED [This Obscure 5G Stock Could Soon Become a Household Name]( [IT Specialist Wearing VR Helmet]( The New York Times calls its main product "the best, most reliable" device of its kind. It's only a matter of time before you start seeing it EVERYWHERE. [The full story is here...]( A Nifty Lesson, 50 Years in the Making Besides these eight companies that saw their market caps grow by more than $100 billion, there were another 11 companies that enjoyed market cap increases of at least $53 billion. In total, these 19 companies accounted for more than half of the market's gain over the past year. And they added $7.6 trillion in wealth to investors. Now, some of this isn't new. The [FAANG stocks]( - Facebook (Nasdaq: FB), Amazon, Apple, Netflix (Nasdaq: NFLX) and Alphabet (Nasdaq: GOOGL) - have represented a considerable portion of the market's gains for years. I have repeatedly stated that the markets go wherever these five companies go. They are the heaviest-weighted stocks on the major U.S. indexes. This is a situation comparable to that of the "Nifty Fifty" of the 1960s and '70s. Those 50 companies - which included Avon, Coca-Cola (NYSE: KO), Eastman Kodak (NYSE: KODK), General Electric (NYSE: GE), J.C. Penney, IBM (NYSE: IBM), McDonald's (NYSE: MCD), Polaroid, Sears and Xerox (NYSE: XRX) - propelled the American economy forward and were the driving force behind the bull market at the time. They had high earnings growth and high price-to-earnings ratios. And they were touted as "one decision" stocks: companies that investors bought and held forever. But nothing in the markets is forever. And when investors are concentrated in a handful of companies, the inevitable happens. Surviving a Bear Attack During the [bear market]( from 1973 to 1974, many of the Nifty Fifty were hit much harder than the broader markets. Their shares collapsed 60% or more. Sure, some of the Nifty Fifty are still alive and kicking today. Some of these highfliers merged, like Bristol-Myers and Squibb. Some are defunct, monuments to eras passed. Unfortunately, this is a situation that repeats over and over again. I have a tote bag from Lucent Technologies that hangs in my office. It was given to me in the early days of my career as a reminder of what can happen. Lucent was once the most widely held stock in the country. Everyone owned it. And when the company missed on fiscal first quarter earnings on January 6, 2000, it not only marked the beginning of the end for a superheated tech bubble but also ruined scores of investors' retirements. Technology has been our salvation during the pandemic. It has enabled business to continue and has allowed us to "visit" family, friends and co-workers. The fortunes of many tech companies - and investors - have been buoyed by the run-up in their shares over the past year. But this creates an even greater risk - overconcentration in a handful of stocks. When the rollover occurs, or when a bear market or correction reappears, these will likely be hit the hardest. Now, a stock market drop won't kill great companies. A number of the Nifty Fifty are still in business. Apple, Amazon and Microsoft have survived multiple bubble bursts. But investors heavily weighted into just a handful of names - especially the wrong ones - can see their dreams of financial independence and a wealthy retirement crushed by these drops. Here's to high returns, Matthew [Leave a Comment]( MORE FROM PROFIT TRENDS [E-Commerce Will Make Up More Than Half of Chinese Retail Sales This Year]( [Three Steps to Take for Higher Returns in 2021]( [The Electric Vehicle Revolution Has Hit the Tipping Point]( [Facebook]( [Facebook]( [Twitter]( [Twitter]( [Email Share](mailto:?subject=A%20great%20piece%20from%20Profit%20Trends...&body=From%20Profit%20Trends:%0D%0A%0D%0AIn%20the%201970s,%20the%2050%20stocks%20that%20pushed%20the%20economy%20forward%20suffered%20collapses.%20Will%20we%20see%20history%20repeat%20itself?%0D%0A%0D [Email Share](mailto:?subject=A%20great%20piece%20from%20Profit%20Trends...&body=From%20Profit%20Trends:%0D%0A%0D%0AIn%20the%201970s,%20the%2050%20stocks%20that%20pushed%20the%20economy%20forward%20suffered%20collapses.%20Will%20we%20see%20history%20repeat%20itself?%0D%0A%0D SPONSORED [Author of Get Rich with Dividends Is Giving Away His Ultimate Dividend Package FOR FREE!]( [Click Here to Get Marc Lichtenfeld's Ultimate Dividend Package]( Including Details on His No. 1 Dividend Stock... the Safest 9% Dividend in the World... the Top Three "Extreme Dividend" Stocks... and Much, Much More. [For Free.]( [The Oxford Club] You are receiving this email because you subscribed to Profit Trends. Profit Trends is published by The Oxford Club. Ready to start investing? [Click here now.]( Questions? Check out our [FAQs](. Trying to reach us? [Contact us here.]( Please do not reply to this email as it goes to an unmonitored inbox. [Privacy Policy]( | [Whitelist Profit Trends]( | [Unsubscribe]( © 2021 The Oxford Club, LLC All Rights Reserved The Oxford Club | [105 West Monument Street](#) | [Baltimore, MD 21201](#) North America: [1.800.589.3430](#) | International: [+1.443.353.4334](#) | Fax: [1.410.329.1923](#) [Oxfordclub.com]( The Oxford Club is a financial publisher that does not offer any personal financial advice or advocate the purchase or sale of any security or investment for any specific individual. Members should be aware that although our track record is highly rated by an independent analysis and has been legally reviewed, investment markets have inherent risks and there can be no guarantee of future profits. The stated returns may also include option trades. We expressly forbid our writers from having a financial interest in their own securities recommendations to readers. All of our employees and agents must wait 24 hours after online publication or 72 hours after the mailing of printed-only publications prior to following an initial recommendation. Any investments recommended by The Oxford Club should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Protected by copyright laws of the United States and international treaties. The information found on this website may only be used pursuant to the membership or subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of The Oxford Club, 105 W. Monument Street, Baltimore MD 21201.

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