George Noble@gnoble79
For years they told you stock picking was dead.
"Just buy the index. Don't bother with research. The passive bid will carry you."
I'm here to tell you that era is OVER. And the people who don't adjust are going to pay for it.
The S&P 500 just broke below its 200 day moving average for the first time in 214 sessions. It's on pace for its fourth consecutive losing week.
The Mag 7 which carried the entire market for 3 years are getting dismantled.
Microsoft down 18% year to date. Amazon down 10%. The Roundhill Magnificent Seven ETF down 6% while the equal-weight S&P is outperforming.
The rotation I've been calling for is here. R is for Rotation, not Recession.
But here's what most people don't understand about passive investing, and why this unwind could be SAVAGE:
The machine that drove prices up without caring about fundamentals is going to drive them down the same way. There's been no real price discovery in large-cap US equities for years.
Money flowed in because money was flowing in. That's NOT investing.
I saw the exact same dynamic in Japan in the 1980s. I ran the Fidelity Overseas Fund during that bubble.
The Japanese market got to two-thirds of the entire non US equity index. Banks traded at 100x earnings, 10x book.
The float was so tight you couldn't buy or sell ANYTHING in size without moving the market 20%.
Jeremy Grantham, John Templeton - all the greats were screaming about it.
They were early. But once the worm turned, it was fast. And the beautiful part was you didn't need to be a genius. You just had to avoid Japan and index everything else. Hit them where they ain't.
That's where we are with US mega-cap tech right now.
You don't need to make complicated bets. Just stop being concentrated in the same 7 stocks that everyone else owns.
Step 1: switch your cap-weighted S&P into the equal-weight RSP. Overnight you cut your Mag 7 exposure from 35% to 0.2% per name. The equal weight has been winning all year. I think that continues.
Step 2: look overseas. International markets have been outperforming the US in 2026. European equities, Japanese stocks, emerging markets - all cheaper, all under-owned, all benefiting from the capital rotation out of US tech.
Step 3: get into real assets. Gold. Energy. Commodities. These are the sectors that perform when inflation is the dominant risk, which it is. Oil at $96 with a war in the Persian Gulf isn't going back to $50 regardless of what any politician promises.
And step 4: if you have the stomach for it, there's a portfolio of overvalued garbage out there that's going to get cut in half. Companies with no earnings, no moat, and no reason to exist at current prices. The short side hasn't been this attractive since 2000.
After years of the index crushing active managers, the tables have TURNED.
Dispersion is widening. Fundamentals are starting to matter again.
Stock picking isn't dead.
IT WAS JUST SLEEPING
![[MJ] is on](https://pbs.twimg.com/profile_images/1111948792482402305/Rk4RKHqe.png)
