When an industry is “hot” money is put to work quickly through the buying of the ETFs of that industry. Money flows in, the ETF buys the stocks within that ETF and the stocks go up. Momentum buyers buy more of the ETF and the ETFs buy more of the stocks. It is a wonderful thing! That’s pretty much how seven stocks have driven the market higher over the past decade.
The seven stocks that have driven the market are Apple, Meta, Tesla, Nvidia, Microsoft, Alphabet and Amazon. Money flows into the NASDAQ 100 (QQQ) and the S&P 500 (SPY) and because these indices are market weighted indices, an outsized amount of money goes into these seven stocks and less into the remaining stocks in the indices. Continue reading