The S&P 500 Is Lying to You
Strip out 7 stocks and the “boom” looks like a whimper.
The S&P 500 is in a strange mood.
It smiles for the camera, flashing a 5.6% earnings growth rate for the second quarter.
A nice enough figure — not euphoric, not recessionary — just enough to keep the headlines hopeful and the ETF flows humming.
But behind the curtain, we see the truth: the index doesn’t stand on 500 legs.
It teeters on seven.
The “Magnificent 7” — still doing the heavy lifting.
According to FactSet, three of these tech titans — NVIDIA, Microsoft, and Alphabet — are among the top six contributors to S&P 500 earnings growth this quarter.
Add in Broadcom and you’ve got nearly the whole market narrative stitched into the silicon of semiconductors.
In total, the Magnificent 7 are expected to post earnings growth of 14.1% for Q2.
Take them out of the equation? You’re left with a market scraping together just 3.4% growth — an anemic number for a supposedly booming economy.
The other names on the growth leaderboard — Warner Bros. Discovery and Vertex Pharma — are merely rebounding from last year’s disasters.
Their “growth” is a mirage, flattered by weak comps and accounting smoke.
But here’s the twist.
The tide may be turning.
Analysts expect that over the next three quarters, earnings growth from the Magnificent 7 will cool — falling to the 9–11% range.
Meanwhile, the other 493 companies are forecast to wake from their slumber.
By Q1 of next year, they may post earnings growth of 10.8% — on par with Big Tech.
So what’s happening?
This is the beginning of dispersion — the slow unwind of an era where seven stocks could carry the market, the media, and the money all by themselves.
We’re not there yet. For now, the index is still lopsided.
Still addicted to a handful of tickers. Still a tech-heavy machine that runs on optimism and Nvidia GPUs.
But gravity works — eventually.
When investors pay a 30x multiple for 7 names and a 15x multiple for everything else, the next leg of performance doesn’t come from the top. It comes from the middle. The overlooked. The underweighted.
What We’re Focused On
At North Tech Capital, and within the NTC Global Tech 15, we pursue a discretionary strategy — not a dumb index.
Which means we don’t just watch the risks pile up.
We act.
If dispersion turns to drawdown, we’re ready to raise cash and protect capital — fast.
That’s not just active management.
That’s discipline.
In times of uncertainty, cash is the safest position in any equity portfolio, tokenized or not.
And discretion — not blind allocation — is how you stay solvent when the music stops.
Until next time,
North Tech Capital
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Disclaimer
This post is for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Any reference to specific securities is purely for illustrative purposes. Interests in the fund will only be made available in compliance with applicable securities laws. Past performance is not indicative of future results. Readers should conduct their own research or consult a qualified financial professional before making investment decisions.