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The month that was:
In June, the Nasdaq went up by about 6%, the S&P 500 went up by about 3.5%, and the Dow went up by about 1%. For the first half of 2024, the S&P 500 went up about 15%, and the Nasdaq went up about 18%.
On June 12th, the CPI report showed that prices did not go up at all from April to May, which was good news. On the same day, the Fed kept interest rates the same and predicted only one rate cut in 2024, down from three. On June 18th, Nvidia passed Microsoft to become the most valuable company in the world, worth more than $3.3 trillion. Nvidia's stock had gone up about 170% this year.
This brings up an important idea called concentration. The S&P 500 has 500 companies, but because it is weighted by market cap, a handful of giant companies have a huge effect on it. This year, Nvidia alone was responsible for about one third of the S&P 500's gains. Meanwhile, the average stock did much worse than the index.
When a few stocks drive the whole market, it can be risky. If those few companies have a bad month, the whole index can go down, even if other companies are doing fine. This is one of the reasons I own companies across many different sectors, like industrials, consumer companies, financials, and technology. I would love to have owned more Nvidia this year, but no one can predict which single stock will win, so diversification protects me if I am wrong.
Buys -
None.
Sells -
None.
I did not make any trades this month.
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