Why Amazon could be the next black swan for the market

Investing


Investors have been stuffing themselves on a Thanksgiving feast full of technology stocks. Today, tech sector equities comprise nearly 30 percent of all large-cap mutual fund portfolios; this is an accident waiting to happen.

This represents the largest “overweight” relative to traditional benchmarks, relative to other large-cap sectors, in two decades. This represents, too, nothing more than a passive overdose on big tech, setting up large downside risk.

This development causes me to hearken back a decade.

Of course, who could possibly forget the great gorging on the financial sector heading into the crisis? Leading into 2007, banks and insurance companies comprised nearly 24 percent of the S&P 500. Today, the tech sector’s large market weighing puts it up near 26 percent of the market’s total capitalization.



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