Fourth Quarter Investment Commentary 2023

Dennis O'Keefe |

As we reflect back on 2023, we are thankful for the gains we experienced in our portfolios in general.  Yet, if we just focus on the surface issues, we might encounter unexpected problems in the future.

2023 was unique in that a large portion of the gains within the stock market can be attributed to just 7 of the top 10 largest US companies:




Google (Alphabet)

Facebook (Meta)





I ran some quick-and-dirty calculations in mid-November.  At that time, these seven stocks accounted for approximately all of the year-to-date gains in the S&P 500 at that time.  

There is no doubt that the recent December rally has largely been achieved without these stocks.  It will take considerable gains across the board for the market as a whole to catch up to these companies.

How Important Are These Firms?

As the name indicates, the S&P 500 is comprised of the largest 500 US companies, sorted by something called “market capitalization.”

Market capitalization, or market cap, is the value of all of the outstanding shares of a company times its per-share price.

Now you can see why Tesla is such a big company.  It isn’t large due to sales or employees or locations.  It’s large because investors can’t get enough of the stock.  Elon Musk is an attractor and people want to own stock in his companies.

Within the S&P 500, each stock is weighted based on its market cap.  The largest company gets the largest share of the index, and so on.  

These seven stocks comprise over 25% of the entire average.  

That means that, at least through Thanksgiving when I ran my analysis, the remaining 75% of stocks within the S&P 500 were about a net zero gain for the year.  

In the recent weeks, the remainder of the markets have risen significantly.  But the overall gain has not made up for the massive growth within these top 7 companies for the year.

Warning Signs For The Future!?

I guess the big question is:  What sort of problems could this cause in the future?

First of all - if one of these companies falters, the ripple effect within the various stock averages and indices will be massive.  It will appear as if the whole world is falling apart.  

Second, this is a very unique situation and is unlikely to be sustained in the long term.  Often, a few large companies have an outsized effect on the index.  But rarely do you see the top 10 (including the 3 stocks I didn’t mention) control almost a third of the index.  


How Can We Use This Data Today?

Investors often compare themselves to the S&P 500.  “How did I do compared to the S&P?”  Alas, that is a comparison that can only lead to frustration for 2023.

If you have a well-diversified portfolio, even one devoid of any bonds, you will be easily bested due to the seven stocks we’ve discussed.  There is no other reason.  While almost every stock category returned healthy double-digit returns in 2023, the S&P 500, due to these stocks, bested it by as much as 10% or more.

What’s worse - if you beat the S&P 500 this year, it means you are likely taking far more risk than you understood.  If that humbles you, good!  It should.  Because the alternative is a confidence in your abilities based not on skill but on random outcome.

That confidence can cause you to overestimate your investing skill which, in turn, will lead to bad decisions and potentially massive investment losses later.

How should we review 2023?  By enjoying the gains you did receive.  Bonds, in general, were up during the year, along with the interest rates they produced.  Stock returns were above long-term averages.  Trying to compare yourself to an “index” comprised of the seven most popular stocks of 2023 is probably an exercise in futility.

If you have any questions or concerns, please don’t hesitate to email us at or call us at (800) 453-3209.  If you don’t already have a copy of my book, The Biggest Financial Mistakes Retirees Make, you can order it on Amazon or click here, and we will get a copy out to you free of charge!

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This blog is the opinion of Successful Money Strategies, Inc. and is provided for informational purposes only and is not intended to provide any investment advice or service.  Statistics and other figures are accurate at the time of original publishing.  Any advice herein should not be acted upon without obtaining specific advice from a licensed professional regarding the reader's own situation or concerns. 

The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed. This presentation may not be construed as investment, tax or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.

Always count your change.