Over the last 7 years, mega caps have been the place to be for investors. The have performed better than the overall market indices and as a consequence their market capitalization has exploded; for example, #apple is now worth $3Tn and more than all the stocks on the #russell2000 or the #Dax. As you can see in the chart below the ten biggest stocks in the S&P500 have a combined market cap of 32% of the index, a maximum of the last 30 years. Their combined earnings, however, only weight 21.5% of the index, but more importantly that weight is decreasing. That’s creating a divergence between performance and profitability, and the big question is how long prices can sustain the gravity pull.
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