Stock market watchers keep complaining about the breadth of the rally — especially in tech.
"The market's weakness, if it has one, is the concentration of investor monies in one corner of the market: Mega-sized growth stocks, particularly technology," said MarketWatch a few days ago.
CBS News agreed: "Consider that just 68 percent of S&P 500 stocks are in uptrends right now vs. 80 percent back in March. Nor
Here's the year-to-date performance of each of those five big tech stocks — plus Netflix — as of Friday morning:
- Apple +32.5%
- Alphabet +25.2%
- Microsoft +13.9%
- Amazon +33.8%
- Facebook +32.3%
- Netflix +32.3%
Meanwhile, the Dow Jones Industrial Average (decidedly non-tech) has a YTD return of +7.1%.
Those who worry about the narrowness of the market breadth usually link this tech strength to a sign of weakness in the broader market. They usually conclude that the disconnect between the success of the tech stocks and the dull returns of the rest of the market must be a mistake on investors' parts.
Investors must be placing too much hope in these growth stocks, the critics conclude. Some wonder if this hope will all come crashing down soon as it did following the late '90s dot-com explosion.
Here's an alternative explanation for this outperformance of these tech stocks this year: Maybe it's warranted.
There's a good case to be made that it's not a bubble of the biggest tech stocks; it's that the biggest tech stocks have grown to another level in the last few years.
Here is a list of the so-called