The Magnificent 7 is a basket of mega-cap stocks (market caps above $200 billion) that investors can retire on. However, they are getting pretty costly. Meta META 0.00%↑ springboarded from $400 to $480 after their last earnings report, and “semi-conductor Sultan,” Nvidia NVDA 0.00%↑, continues to reach all-time highs as it trades near $700.
As these stocks become more costly, it’s time to start looking at large-cap stocks (market caps above $10 billion). Here are a few reasons to begin evaluating and investing in large caps:
While megacaps may sharply decline, they will inevitably bounce back and surpass their support lines. Large caps may take more time to recover in a major downswing.
If there are major down swings, then that also means that there are more significant up swings. Large caps are characterized as balanced in growth and value, and the opportunities to find large caps that sway a bit more growth are common.
One cautionary tale of large caps is understanding how long they have been publicly traded. Companies like Palantir PLTR 0.00%↑ entered the market in September of 2020 and so far, are demonstrating that a newcomer can rise quickly to compete against more established players.
Conversely, Paypal PYPL 0.00%↑ opened in the public markets in 2002, and their historical charts paint a different picture.
Palantir (left) and Paypal (right) showing the full historical chart. Chart by TastyTrade. Watch our tutorial on how to setup a TastyTrade Cash account here.
Transitioning from megacaps to large caps are not only a diversification strategy, but the higher risk may be the difference in seeing greater returns in a faster period of time.
Note: Please read this site's 24Hour Journal disclaimer regarding finance and investing information.
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TIP: Start Transitioning from Mega Caps to Large Caps
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The Magnificent 7 is a basket of mega-cap stocks (market caps above $200 billion) that investors can retire on. However, they are getting pretty costly. Meta META 0.00%↑ springboarded from $400 to $480 after their last earnings report, and “semi-conductor Sultan,” Nvidia NVDA 0.00%↑, continues to reach all-time highs as it trades near $700.
As these stocks become more costly, it’s time to start looking at large-cap stocks (market caps above $10 billion). Here are a few reasons to begin evaluating and investing in large caps:
While megacaps may sharply decline, they will inevitably bounce back and surpass their support lines. Large caps may take more time to recover in a major downswing.
If there are major down swings, then that also means that there are more significant up swings. Large caps are characterized as balanced in growth and value, and the opportunities to find large caps that sway a bit more growth are common.
One cautionary tale of large caps is understanding how long they have been publicly traded. Companies like Palantir PLTR 0.00%↑ entered the market in September of 2020 and so far, are demonstrating that a newcomer can rise quickly to compete against more established players.
Conversely, Paypal PYPL 0.00%↑ opened in the public markets in 2002, and their historical charts paint a different picture.
Transitioning from megacaps to large caps are not only a diversification strategy, but the higher risk may be the difference in seeing greater returns in a faster period of time.
Note: Please read this site's 24Hour Journal disclaimer regarding finance and investing information.