Trillionaires’ Tactics: Mastering the Stock Market Game for Every Investorc

In 2023, the Trillionaires, consisting of seven U.S. companies valued at $1 trillion or more—Alphabet Inc. (Google’s parent), Amazon.com Inc., Apple Inc., Meta Platforms Inc. (Facebook’s parent), Microsoft Corp., Nvidia Corp., and Tesla Inc.—took charge of the S&P 500, exerting a profound influence on the market’s trajectory, whether for better or worse.

These corporate giants, dubbed the Trillionaires for their colossal valuations, added over $5 trillion to the S&P 500’s market capitalization in 2023, representing nearly 65% of the annual gain that boosted retirement accounts and index-fund portfolios. A similar concentration of market gains occurred in 2020, involving the same group of companies.

Beyond mere market-cap growth, excluding Tesla, the Trillionaires played a pivotal role in pivotal market events. Nvidia, for instance, played a key role in ending the S&P 500’s earnings recession, and strategic moves by Big Tech prevented a decline in corporate America’s record profit margins amid rising inflation rates. Essentially, this exclusive group not only orchestrated the market rebound in 2023 but is also central to expectations for 2024 and beyond.

Considering the Trillionaires’ impact on the S&P 500, one might question the traditional investment thesis of S&P 500 index funds, which relies on random diversification and numerical principles. However, Deep Dive investing columnist Phil Van Doorn reassures that the S&P 500 is inherently self-correcting, favoring success over time.

While this might hold true in the long term, challenging these deeply entrenched and well-capitalized incumbents poses a significant hurdle for potential rivals. Short-term challenges may emerge, particularly in the realm of artificial intelligence windfalls and associated costs, potentially delaying the anticipated growth in profit margins during the AI era.

The broader narrative also raises existential questions about whether these companies should shape the market and economy. As they embrace AI for automation, leading to layoffs, Silicon Valley develops software with broader applications, prompting reflection on the trade-off between higher profit margins and a potentially diminished labor market. Consequently, these companies, prompting such contemplation, merit a more fitting epithet than a reference to Hollywood gunslingers.

Moreover, the Trillionaires warrant scrutiny as they navigate the market through an uncertain future, prompting considerations of potential monopolization, even though antitrust law does not directly apply to the stock market.