FA Center: The ‘Magnificent Seven’ is like the ‘Nifty 50’? If only they could be so lucky.

by News Feed Editor | Nov 30, 2023 | Stock Market

The “Nifty 50” were pretty nifty, after all. This group of 50 blue-chip U.S. stocks dominated the bull market of the early 1970s and traded for sky-high P/E ratios. Though they were thought to be “set ’em and forget ’em” stocks — “one decision” stocks, as some called them — the group lost a huge amount on average in the 1973-74 bear market.

As a result, the Nifty 50 are often mentioned in any cautionary tale about the dangers of buying popular growth stocks at rich valuations. Their average P/E at the December 1972 stock market peak was over 40, for example, more than double the S&P 500’s ratio. Recently, for example, Apollo Global Management’s Torsten Slok analogized today’s “Magnificent Seven” stocks to the Nifty Fifty, arguing that these seven are just as overvalued today as those 50 were in 1972. The Magnificent Seven stocks are Meta Platforms
META,
-2.41%
; Apple
AAPL,
-0.14%
; Amazon.com
AMZN,
-0.90%
; Alphabet (Google)
GOOGL,
-2.35%
; Microsoft
MSFT,
-0.62%
; Nvidia
NVDA,
-2.85%
and Tesla
TSLA,
-1.14%.
Collectively, these stocks’ current P/E is 53.0, on average, a …

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[mwai_chat context=”Let’s have a discussion about this article:nnThe “Nifty 50” were pretty nifty, after all. This group of 50 blue-chip U.S. stocks dominated the bull market of the early 1970s and traded for sky-high P/E ratios. Though they were thought to be “set ’em and forget ’em” stocks — “one decision” stocks, as some called them — the group lost a huge amount on average in the 1973-74 bear market.