Investment Team Notes – Market Comments and Rebalancing Notice

Many folks are glued to the screen today watching some interesting market moves. We are too, but we’ve also built the Smarter Portfolios to insulate against some of the micro drama that happens day-to-day. We’ve been speaking recently of the concentration within many of the major indices and are seeing pullback in some big technology names that have been carrying high valuations. All else equal, an outsized valuation can make a stock even more sensitive to interest rate movements, if for nothing else than just the math behind very basic valuation models.

As we’ve pointed out in some of our recent notes, the effect of a drastic move on a larger holding within an index has contributed to a larger move of said index. At the time of writing, Amazon (AMZN) is down over 4% for the day and makes up 6.75% of the Invesco QQQ Trust (QQQ), which tracks the Nasdaq 100 index. A smaller holding at 1.64% of QQQ, Netflix (NFLX) is down over 20% after providing disappointing earnings information. Actually, a number of names within the Nasdaq 100 are actually in the positive midday Friday, but of course it’s more exciting news to look at the large individual moves. We certainly aren’t downplaying what is happening in the markets with a broad price adjustment but wanted to add a little color from the perspective of a broadly diversified portfolio. We have some in-depth commentary on strategy diversification and portfolio holdings coming up in the near future along with the recap of our quarterly investment committee.


Disclaimer: The Nasdaq-100 (^NDX) is a stock market index made up of 101 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock market. It is a modified capitalization-weighted index. The stocks’ weights in the index are based on their market capitalizations, with certain rules capping the influence of the largest components. It is based on exchange, and it does not have any financial companies. The financial companies are in a separate index, the NASDAQ Financial-100.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which Investment(s) may be appropriate for you, consult your financial advisor prior to investing. Information is based on sources believed to be reliable, however, their accuracy or completeness cannot be guaranteed. Statements of forecast and trends are for informational purposes and are not guaranteed to occur in the future. All performance redferenced is historical and is no guarantee of future results. Stock investing involves risk including loss of principal. An investor cannot invest directly in an index.
Advisory services are offered through WealthPlan Partners (“WPP”) or WealthPlan Investment Management (“WPIM”). WPP and WPIM are both registered investment advisors and are subsidiaries of WealthPlan Group, LLC.