Should You Sell Your UNDERPERFORMING Mag 7 Stocks?

0:00Hello everyone. The Mag 7 stocks have fallen from grace. The government is ready to pump markets to the sky. Boomers just admitted a shocking preference on taxes and David Friedberg, he perfectly articulates makers versus takers. We're live today from the desk of Anthony Pompliano.

0:24All right, ladies and gentlemen, the Mag 7 stock, you probably see them all over the headlines. They've been the beauty at the ball, but that's because they've been a huge driver of investment returns for millions of Americans over the last few years. The darling of the stock market, though, they now have fallen from grace and everyone's freaking out. Carson Group's Ryan Dietrich writes that the mag seven is down year to date. That's not good, but the 493 other stocks, they're up more than 13 % since the start of the year. That's one of the most incredible stories. Now, it wasn't that long ago that Ryan says most client meetings were all about, why don't we only invest in these seven stocks and not in the rest?

0:59Well, thankfully indexes are a team sport and the other 493 stocks, they've helped the SMP stay positive for the year. The S &P is up about 9 % since the start of 2026. Now it is uncommon to have the entire market driving investor profits though. It's a very important data point. Lance Roberts points out that research spanning from 1926 to last year finds that just 41 % of U.S. stocks outperformed treasury bills over their lifetime. Only 41%. And only 46 companies generated half of the market's$91 trillion in cumulative wealth creation. 46 companies. That's it. Now, it's a good historical fact, and you should understand it, but it doesn't excuse the poor performance from the MAG7.

1:38In hindsight, though, the sell-off and the lack of performance, it's really not that surprising. These seven stocks became more than 30 % of the S &P index at one point. That highlights just how dominant the businesses were compared to their peers. Now, some people are going to argue that the relative weakness over the last six months is just a cooling off period. Don't worry. And there may be some truth to that theory. I just don't think you can exclusively rely on it. Simply, the most popular stocks have suddenly lost steam. So we must dig into why is that happening? In my opinion, it's much more likely these stocks are suffering from higher inflationary pressures from the Iran war.

2:10Gotta remember that growth stocks are long duration assets. And so they're very sensitive to inflation issues. And there's a big question around the expected ROI from the insane capex spending from the hyperscalers. Now, I can't have a conversation with a public market investor right now without them asking me, do you think AI adoption is going to slow down? Now, many of these investors, they're frankly just scared of their own shadow. They genuinely believe that there could be some sort of boogeyman out there where the world suddenly doesn't find this new technology valuable. I think that is absurd.

2:37I obviously disagree with their concerns. I personally believe AI adoption is gonna accelerate from here, not slow down. But my opinion is not gonna prop up the MAG7 and it's not gonna prevent investors from rotating their capital into smaller stocks that they deem cheaper from a valuation standpoint. Another thing to keep in mind is that the MAG7's breathtaking performance in the last few years, it all occurred against a backdrop of insane fiscal and monetary policy. These bad decisions drove all asset prices, including these seven stocks, much higher at a rate that outpaced even the most bullish investors.

3:08It was just grow to the sky. Trillions of dollars printed and rates at 0%. That is a bull market cocktail if I've ever seen one. But thankfully, investors in the MAG7, you don't need to go cry in the corner for long. We're starting to return to the ridiculous bad policies. Charlie Blolo writes that the debt ceiling was raised by$5 trillion less than a year ago. U.S. national debt already increased by over$3 trillion. At this pace, he says, we'll be back debating another ceiling in 2027. Now, the U.S. government can't help themselves. They only know how to spend more and more money. It doesn't matter how much funding they receive from your taxes or mine.

3:43If they can't fund their dreams, they just print the balance. I doubt anyone with half a brain thinks that this is sustainable. It is not sustainable to increase the national debt by$3 trillion per year. But here we are. We're all pretending like everything's fine while the house goes up in flames. So the money printer is going to work hard to make sure investor portfolios keep growing to the sky. And if you don't believe me, just look at this chart right here of the S &P 500 over the Fed's balance sheet. It's not exactly what you want to see if you believe you were a stock market genius who wasn't relying on the Fed to create paper gains for your portfolio.

4:14But however, the more important question in my mind is whether there are data points from the companies themselves that give me confidence that brighter days are ahead. and there absolutely is. Barry Schwartz writes that the S &P 500 profit margins are up 58 % since 2011. He says that the fact that profit margins are up 58%, historical PE multiples have zero relevance. Now I tend to agree with Barry. It's hard to point to stock valuations before the iPhone was invented when you have trillion dollar companies growing revenue at 50 % year over year. This type of growth at this scale was previously unfathomable, but this is the result of a digital economy that benefits from capital and information moving at the speed of light.

4:53Everything happens faster, including companies making more money and valuations surging higher. This acceleration creates outsized returns for investors too. Balelo highlights that the S &P 500 is up 15.6 % per year since the start of 2020. It's on pace for its strongest decade since the 1990s. Now it's hard for investors to complain about the destruction of the US dollar or for them to complain about the case-shaped economy. Why? Because the root cause of those issues, it's enriching the investors. If you add in the fact that stocks particularly the MAG7, are going to continue to benefit from the U.S.

5:24economy being artificially propped up by stimulus, well, you can quickly see why there is not much panic in the market. So investors have been conditioned to believe that the Fed and the U.S. government, they're essentially guaranteeing financial returns. You just have to be disciplined and courageous enough to risk your capital in the market and then just hold on for dear life as you go for the ride of a lifetime. The Fed and the government, they're printing cash, they're going to manipulate interest rates and asset prices. They only got one way to travel, and that's up and to the right. Every once in a while, I see a chart that just blows my mind.

5:56And this one, it's not surprising what you're about to see, but I got to tell you, when I saw it, I literally just rolled my eyes and was like, of course. So Russ Green points out here, 89 % of senior citizens support raising taxes on younger workers to maintain their benefits. The median primary voter is 65 years old. Just think for a second here. Old people are saying, let's take from the young people so that we can keep getting paid our retirement benefits. Now, when you think about that, there's personal incentives at play, obviously. But Akash Kujuli, he writes that retirees on average are much wealthier than young Americans.

6:30So that is a little bit of a plot twist. Social Security can pay as much as$60 ,000 per person. Medicare can pay for club memberships, golf course fees, and horseback riding lessons. I didn't know that. Now, he says that they are major drivers of our national debt. That makes necessities more expensive and inaccessible through inflation, high interest rates, and slower economic growth. He says that these retirees grow on autopilot, their benefits, without any annual debate in Congress. And he says that boomers wanna raise your taxes to keep the gravy train rolling. Now, regardless of what you think about boomers or about retiree benefits, two things are true.

7:0889 % of retirees want to take higher taxes from young people so that they can keep getting paid in their retirement years. Now, again, whether you like that or not, That's what the boomers are saying. The second thing is that it is very clear that social security, Medicare, and many other of these benefits, they are a massive drain on the national debt. We are literally printing money to be able to fund some of this stuff. And so if you increase taxes on young people and you print money, it is very extractive to the US economy and to society. Now, the flip side of that is that the US government promised these benefits.

7:42And so we have a hard choice at our feet. Do we tell the people that we promised something? hey, sorry, we know we made the promise, but you're not going to get it? Or do we keep printing money and taking from young people through taxes? That's the question that politicians are going to have to figure out. And it's no wonder. Young people hate it and old people like it. And it all comes down to what's in it for me. Makers versus takers. That's what David Friedberg talked about this past week on the All In podcast. And I got to say, David Friedberg has become one of my favorite people in finance because the guy's just no nonsense.

8:15He just calls it how he sees it. And this idea of makers versus takers is a much better way of looking at the world than looking at rich people versus poor people. So listen to what David had to say this weekend. Len, let's talk about. The great lie is that there are two sides to the society that is the rich and the poor. And the great truth is that there are two sides that are the makers and the takers. The lie is that the rich are unfairly rich and the poor are unfairly poor. and therefore the poor must take from the rich. But the truth is that it's the takers that tell you that lie. That the real truth is that artists, plumbers, electricians, woodworkers, computer scientists, people that build, people that make shit from all walks of life, all income levels, all wealth brackets are the makers.

9:07And the takers are what Sachs calls this intelligentsia, the analysts, the espousers, the armchair mechanics, the critics, the commentators, the politicians, they are the takers. They are the people that watch the rest of society make stuff, build stuff, specifically doing things that create value for other people in society. That's what a maker is. Tell my kids this lesson all the time. I say, what did you guys make today? They tell me something they made. And I'm like, did someone else value it? Or did you make it just for yourself. At the end of the day, if you made something and someone else valued it, you were a maker.

9:43That was an amazing achievement. That is a great day. Whether you make a piece of art, whether you build a house, whether you write a piece of software, whether you build a business, whatever you make, if you're a maker and someone else values it, they become your customer in some way, they become your partner in some way, you've done something valuable. Those are the true engines of progress for humanity. And the takers are the ones that tell the lie that it's rich versus poor, because what they want to do is rip apart the makers and they want to tell everyone you've got to be on one side or the other.

10:11And they use that lie to get everyone to line up against each other and to give themselves ultimately the control to form the great American Politburo, which is what they're trying to create. That is what's underway right now. And that is the fundamental great truth and great lie that we're kind of fighting against at this moment. Now, I got to say, the reason why I like this framework of makers versus takers is exactly what David said. Electricians, woodworkers, many people who create things, even though they're not billionaires or multimillionaires, they're still making a good living. They're still able to provide for their family.

10:42They're making things that people value and therefore they're able to get paid for it. One of the things I always tell people in my life is what's the responsibility of a business? How does a business become successful? It solves people's problems. Same idea for a business as for an individual. If you wanna make money, if you wanna build a life of wealth, if you want to have financial security, the simplest way to do it is just make things that people want. Paul Graham at Y Combinator, They've been talking about this in the startup world for a long time, but it is true everywhere in the economy.

11:10Makers versus takers, as David calls it, that's the best way to look at the world. And my guess is that if you're a maker, you're going to end up actually being rewarded. But if you're a taker, you're going to end up on the losing side of the social and economic debates. But also, you're just a loser. You're just going to end up yelling and screaming at the people who are making stuff and simply keep trying to take their wealth from them. And as we've seen throughout history, that's never a winning strategy. That's it for today's show. Thank you guys so much for watching. Please remember to subscribe on YouTube.

11:39My goal is to get to 1 million subs. So hit the subscribe button and I'll see all of you live from the desk of Anthony Pompliano tomorrow.