The Magnificent Seven, the seven biggest stocks in the S&P 500, can make up as much as 30% of the index, and all seven were down for 2026 by late March. In Episode 031, Luke Tatum, Nicky P and Rob Brayton look at what that means if your plan is just to buy the S&P 500, how much of the run-up rested on promises of data centers that don't exist yet, and what growth really means when the dollar keeps losing value.
“Someone is profiting all the way down”
Nicky jokes that he didn't know we were a film podcast. The Magnificent Seven here are Microsoft, Meta, Tesla, Nvidia, Alphabet, Amazon and Apple, the seven largest stocks in the S&P 500. They've carried the index for a while, and this year they're all down.
What We Covered
All seven are down in 2026. According to the numbers I read on air, all seven were down for the year as of March 27: Apple about 2%, Microsoft about 15% and Tesla about 26%. If your plan is just to buy the S&P 500 and do great, that isn't working right now.
30% of one index. Rob points out that seven companies making up roughly 30% of one index is disproportionate, and they've driven most of its growth. Add a war, and you add volatility and liquidity risk to something that was already fragile.
Someone profits on the way down. When market value drops, Rob says, the money doesn't just vanish. Someone is profiting all the way down, and that's the part most people miss.
“What is the path to profitability?”
Promises of data centers. I mention Ed Zitron's work showing how much of the run-up came from announced deals and data centers that haven't been built yet. Meanwhile, anyone who builds PCs has watched component prices soar.
Pushback on data centers. Rob notes that in the Midwest, including a case in Wisconsin, local communities are pushing back on new data centers because of rising electricity costs. Sometimes the land and the power aren't even in place.
What is the path to profitability? Are we buying these stocks because they're going up, or because there's a real path to profit? An economy has to be made of real stuff. I'm not richer just because AI companies are valued higher.
“At the end of the day, it has to be stuff”
What does growth really mean? Nicky questions the word itself. In a finite world, companies can't grow forever. A lot of what looks like growth is just the dollar being worth less.
Growth measured against inflation. If a company grows faster than inflation devalues the dollar, maybe it's doing something right. If it grows slower, it may not really be growing at all. Without stable money, it's hard to judge fundamentals.
Interventions add fragility. Rob explains why the Fed and the federal government are so afraid of negative growth, and how every rescue of one group adds fragility to the whole system. A stable currency would let real growth happen.
Key Takeaway
Buying the index means owning a big bet on a handful of companies, whether you meant to or not. We'd rather keep the foundation of our savings somewhere that doesn't depend on seven stocks. At Perfect Spiral Capital, we use properly designed whole life insurance as that foundation, because the cash value grows on a contractually guaranteed basis whatever the Magnificent Seven do.
Key Moments
[1:00] All Seven Are Down in 2026
[3:00] Propped Up by AI
[4:00] 30% of One Index
[7:00] Someone Profits on the Way Down
[8:00] Promises of Data Centers
[11:00] Pushback on Data Centers
[12:00] What Is the Path to Profitability?
[15:00] What Does Growth Really Mean?
[16:00] Why Growth Can Never Stop
[18:00] Interventions Add Fragility
“We actually introduce fragility into the system as opposed to just letting things play out.”
Related Episodes
Episode 016: How Do You Plan When Much of the Market Has No Track Record? Big Tech, Bitcoin and Gold
Episode 013: Is AI a Bubble? OpenAI's $7.8 Billion Loss and the Circular Financing Behind the Boom
Episode 044: Nvidia's $500 Billion Ask: Why BlackRock, Apollo and Goldman Sachs Are Bankrolling Their Own Customer's Demand
Want the full conversation, including Rob on why someone always profits when markets fall? Listen to the full episode and grab the free toolkit at PerfectSpiralCapital.com/podcast.
FAQ
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The Magnificent Seven are Microsoft, Meta, Tesla, Nvidia, Alphabet, Amazon and Apple, the seven largest stocks in the S&P 500. In Episode 031, Luke Tatum notes they can make up as much as 30% of the index.
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If a handful of companies make a large share of the index, an S&P 500 fund is far less diversified than it sounds. Rob Brayton points out that when those few companies fall, they pull the whole index down with them.
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Luke Tatum and Rob Brayton think a lot of the recent run-up rested on announced AI deals and data centers that haven’t been built yet. They question whether there’s a clear path to profit behind those valuations.
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Luke Tatum and Rob Brayton use properly designed whole life insurance as the foundation for their savings. Cash value grows on a contractually guaranteed basis and doesn’t rise and fall with the stock market.
Show full transcript
Between The Lies: Episode 031 Transcript
Nicky P: You have to love how creative the media gets with their names today. Out of nowhere you boys hand me these articles about the Magnificent Seven and I was unaware that we were a film podcast. Welcome to the Between The Lies Podcast, your weekly lesson on how to approach an uncertain world with positivity and balance.
I'm Nicky P here with my good friends and money brains, Luke Tatum and Rob Brayton from Perfect Spiral Capital, as they help us navigate the snares and pitfalls in a world of trust me bro. Economics. Stick around to the end of the video for the free toolkit and be sure to like and subscribe if you enjoy what you see.
What Is the Magnificent Seven? [0:00]
Nicky P: Gentlemen, what is a magnificent seven in this context and why do we care?
Luke Tatum: Yeah. Gosh. So, as much as I'd love to do a film podcast 'cause that's easy and hilarious and you know, we. Get all into the weeds without any trouble whatsoever. This is a little bit more complicated, but we're basically talking about the seven largest stocks in the S&P 500 index.
And so, you know, the S&P 500 is the 500 largest. Right? And then you've got this basically down that we've created at some point recently between the top seven and the other 493. And so the top seven, I'm just gonna read from a list. It's Microsoft, Meta, Tesla, Nvidia, Alphabet, Amazon and Apple and these, from what we can see, it represent at some at times as much as 30% of the total S&P 500 index, which just shows you how crazy the focus on AI and all these, you know, tech contracts kind of inflating the prices of each other and all this stuff have been, but.
All Seven Are Down in 2026 [1:00]
Luke Tatum: They're all down, right? We're talking about the magnificent seven. All seven of these are down on the year 2026. So far as of, March 27th, that was, you know, including Apple down 2% on the year at that point. But. Microsoft is down 15% and Tesla's down 26%. You know, so we're talking about some pretty significant falls.
And if your portfolio, if you're, if you're following the advice of, Hey, just buy the S&P 500, you're gonna do great. Do, you're not right now. Like, as you're just not. And part of that is the war, but a lot of it is not. And so I thought we might, talk more about that today.
Nicky P: So I just wanna be clear here.
Are we amusingly talking about the same tech stocks that we've been talking about for the past couple months in AI and technology that are going to collapse our dichotomy, we believe based on perhaps fraudulent bookkeeping, et cetera, et cetera, that now just suddenly has a fancy name for all of them.
Propped Up by AI [3:00]
Luke Tatum: Right. I mean it's not to say that we're qualcom and all of. You know, AI and, and these, the compute to run ChatGPT and Claude and Perplexity and all these things, you know, but all of these companies that we're talking about are definitely linked to that and they are definitely being like artificially sort of propped up in various ways.
You know, go back and look at some of our previous issues. Episodes on this if you want to really get into it, and I, you know, but we've certainly hit it from a lot of angles. If you think of this as a Rubik's cube, I mean, we've been spinning around the pieces and trying to make it make sense for months, as you say.
Nicky P: If I remember correct, the first article we wrote was specifically on how a lot of these companies are propping each other up by investing in each other.
Luke Tatum: Right it.
Nicky P: And so it is like what's, how do you tell a real value on anything when it's also interconnected? Like each one relies on the other ones to exist from the value that they have?
What's Driving the Drop? [4:00]
Luke Tatum: Well, I mean, I could make an hour long podcast just complaining about Microsoft. Right. But, And, and talking about all the horrible things that they've been trying to do with their AI models and integrating that into their operating system. And I feel myself getting into a huge diatribe, so I'm gonna back off, but, Rob, I mean, what do you think, other than the fact that it's an AI exposed thing, is this, are you seeing just the overall pressures of the war?
Are you seeing the, you know, AI, kind of the AI angle being. We're refusing to partner with the Pentagon, like that's fueled some dialogue here lately. I mean, what do you, what do you sort of see is going on?
30% of One Index [4:00]
Rob Brayton: Yeah, I've been tr been thinking about that too. So overall, I think in this scenario you have, so you got these seven companies making up roughly 30% of one index.
So disproportionately high. When you consider the entirety of. Just that index as a whole, but what's been driving the growth of that index? Primarily it's these seven companies and now you're starting to see that they aren't performing as well. And anytime you enter war into these, into the situation, you introduce what volatility, and you also introduce liquidity risk.
A lot of these other types of scenarios that start to take place when. There's a lot of uncertainty in the world, so I certainly see it as there a good indicator of just how fragile that sort of growth is within that tech space. So yes, it's growth, but is it steady, is it consistent? Is there is true product with profit and revenue driving behind it?
That's, I think that those are some of the things we've talked about already. We know that they're probably not that strong and we're waiting for AI to be this, you know, great savior, so to speak and drive this growth into a huge new economy. Well, that hasn't really happened yet, and there's a lot of intricacies that are tied into it that, that may or may not allow that to happen.
So. A lot of dependencies, right, that are, that are part of the infrastructure basis of the economy, and we don't even have all that stuff squared away yet. So this is why this whole space is a little fragile, if you want to put a word on it. And then from there, I don't know, where does it go from here If it's already fragile and all of a sudden you enter in a lot of, you know, volatility, you enter in a lot of risk.
Well, what. That that space could go, just, could tumble. Especially now you, you talk about one of our most recent episodes of private credit, it doesn't take much for that whole market to just start imploding. And if that starts imploding, then you get a lot of other things kind of cascading on one another.
Someone Profits on the Way Down [7:00]
Rob Brayton: That could be a really bad situation. Hopefully that doesn't happen, especially when we consider that a war is a decision. And, I think the other aspect of this to really consider is. When that market value drops, it's not like the market, just like that money just stopped being there. Someone, it went someplace.
Somebody is capitalizing on that wealth and it is going somewhere. Someone is profiting when things go down and that, that I think is the single biggest thing that people miss when you have market volatility and market problems. Someone is profiting all the way down and, and that's what we don't know.
Who, the conspiracy hat part of me is like, oh, well, you know, it's all planned and, you know, and we see glimpses of some of that, but I don't wanna take up too much time, just kind of riffing there. But I think a lot of those things are related. And, you know, just the S&P alone, we have this nearly a 9% loss just this year since the beginning of the year, or a little over 9%.
Well, that. That market cap, that value didn't just disappear someone, it's in someone's pocket someplace.
Promises of Data Centers [8:00]
Luke Tatum: Right, right. You know, I can't help but think of the, I don't have the exact quote 'cause it's been some time, but several months ago, you know, Nvidia internally circulated some memo talking about how we're not Enron.
Okay. Everybody doesn't need to worry about it 'cause we're not Enron. And it's like, but why do you have the need to circulate this internal memo about that? Right? If everything's fine, why are we all worried about people thinking that we look like Enron right now? Right. And so. Is it a, where there's smoke, there's fire thing?
I don't know. But this whole, this whole nonsense. I mean, I was watching a video earlier, a podcast with a guy named Ed Zitron, I hope I pronounce his last name correctly, but he's talking about how, you know, a lot of the. Increase this past year of surge in price for these companies has been driven by promises of doing these big deals and building out these data centers and increasing the compute power that can go towards powering AI models, which means building more data centers, allocating more resources now.
I use a PC all the time. I don't just specifically mean windows, but you know, I like to build computers, that kind of stuff. Anybody who is in that space knows, like the price of computer components has been so stupidly, hugely overinflated recently, for consumers. Why is that? Because all this stuff is allegedly just going straight to these data centers, right?
We gotta. Keep pumping up this AI bubble, right? Well, you just had Disney pull out of this huge deal, something like $50 million, or it might even be billion. I don't have the stat, but a huge amount of money that's getting pulled away from one of these deals, and it's like, oh my gosh. What do we do now?
There's not only good news on the AI front, you know, everybody starts panicking and we get this kind of pullback and it's just, it's crazy because we're not even talking about building a data center. We're talking about talking about building a data center maybe in the future. And so this Ed Zitron guy, he's, done some great work there trying to figure out like, okay.
We're gonna produce 50 gigawatts, more of electricity. Well, where, you know, where are we gonna do that? Where is this data center that's gonna use all this power? You know, it's not there in a lot of cases. It's like we're just saying, well we bought this land and we're gonna for sure eventually build a data center there.
But like, is that really, is that really the kind of fundamentals you wanna be planning your stock trades on? You know, it's a little scary.
Pushback on Data Centers [11:00]
Rob Brayton: Well, I know being in the Midwest, there's actually a lot of push for data centers in like semi-rural areas and there's been a lot of pushback from the local communities.
Even some of the local governments, they just don't want 'em around because what you've seen is they've jacked up electricity cost. For the average person pretty significantly. So, I know there's a case here in Wisconsin, down near the, I wanna say Sheboygan area. And, there's been a lot of involvement where people are trying to get that kicked out.
They do not want it around. And I think that's some of the situation that you're, you know, that ties into what you're talking about, Luke is. People are saying, oh, well we're gonna prop up with, you know, power. We're gonna do this stuff with the data center. Well, sometimes they don't even have the land, like they don't even have this stuff in place.
And you're basing all this future growth on assuming you can do it well if you can't even put it up. And then you much less put it up than even have the power to power the thing. Now it's a whole different situation and again, we can focus solely on the tech part if we want to, but there's a lot of other stuff that's tied into here too, and you know that it's just one close to home, sort of example where you can see some of these interconnected pieces that aren't coming through or maybe might not come through to fruition that could dramatically impact some of these companies and their supposed expectations for profit.
What Is the Path to Profitability? [12:00]
Luke Tatum: Well, it's like at the end of the day, you know, it's like, what is the path to profitability? Are we, are we buying these stocks because the stocks are going up regardless of whether or not there's any reason for them to be going up. You know, are we just playing off the emotions of kind of the collective investor, if you will?
Or are we just saying, you know, are, is there something there? You know, is there a path to profitability? Like. Snapchat is a good example of that. I don't have the Snapchat chart in front of me, but it's like, what is, what is Snapchat gonna do to like, become a amazing, profitable company? Like, I just still don't see how that could possibly end.
Well, I mean, like, what is it? It's not really anything, you know, and so, I, and another kind of layer to add onto this kind of a pivot, but, A huge proportion, like over $50 billion of this investment into these data centers and all this stuff, all this, you know, supposedly great financing and great deals that we're getting to prop up these prices and to justify this exuberance around, especially Nvidia above even all the other six, a $50 billion of that debt is.
Junk quality, like it is, should not even worth getting involved with as an investor looking at the bond, but they're issuing these junk bonds to make these deals that may never happen. Just so we can say, Hey, the stock market's up right now. Right? Like, it just seems like this in incredibly elaborate way to say, Hey look, the stock market's doing great.
That means the economy's doing great. And it's like, well, the economy is like stuff, you know, there, at the end of the day, it has to be stuff, you know, like I'm not richer if there's just AI companies are more valuable. Right. It doesn't improve my life, you know what I'm saying?
What Does Growth Really Mean? [15:00]
Nicky P: Well, this is one of the things that I was mentioning beforehand that I wanted to bring up is that there's this funny word that we use called growth.
And when we talk about it in the terms of finance, it's the idea there's like the cap keeps going higher and higher, but when you're in a finite world, it's not as though everything keeps being worth more. I mean, there's a sense in that, you know. We have scarcity, and as long as people exist, there's gonna be some type of change and then fluctuation there.
But the idea that like thing companies can endlessly grow when like. Eventually you're gonna run outta the stuff it takes to make the stuff that you make. So what do you do then? Like eventually we're gonna run out of things to pull out of the ground. What do we do then? Where's this value coming from?
And it just, it's just such a strange word. It to me more than anything, just feels like a play on words to kind of do people into believing that it's not their money just being manipulated and the stock market keeps going up. Yeah. But it keeps going up. 'cause your money keeps be working, being worth less,
Luke Tatum: Right.
Growth Measured Against Inflation [16:00]
Luke Tatum: I mean. If you wanna think of it as inflation being a baseline, and then if something is growing faster than inflation is devaluing the dollar, then you go, okay, maybe they're doing something right. Versus if it's, you know, growing slower than inflation is devaluing the dollar, then it's like, oh, okay, well maybe they're actually not growing at all.
Or maybe that's, you know, that's a negative growth. I guess, you know, there's maybe an argument to make there, but. It is, it is kind of difficult to pull these things back apart and sift through them and go, okay, what is good fundamentals for a company or for a portfolio or whatever, if you don't have a stable currency.
Why Growth Can Never Stop [16:00]
Rob Brayton: Well, yeah, I mean, that, that's exactly where my mind was going, Luke. And I was, I was really thinking about that, of. The reason why we have this massive push for all of this growth and it's, it has to go up is because if it doesn't, it starts to go really bad. And, and can really fast. And, and they're worried about, and when I say they, I'm talking about the Fed, I'm talking about federal government.
If we get into a negative growth situation, what happens? Now you have, now you start to have like runaway type inflation because we don't have the economic growth to go along with that level of inflation that's been taking place within the economy. And so much of this just ties back to if you have a stable currency, it actually allows for true growth to take place instead of all of this inflated, fake stuff in a lot of ways that we've seen.
Really over the last couple of decades, and quite frankly, really since 1913, but that's a whole different ball game. But it is related. So I would encourage anybody to dig into that. But, so much of it too ties into all of, all of the economies interlinked in some way, shape or form. And, and anybody who, truly wants to understand some level of economics, you have to look at the whole thing.
Interventions Add Fragility [18:00]
Rob Brayton: You can't look at one of these areas and we have to drive growth for these people, or this person or this group, or we have to save this group. When we do that, we actually cause problems. We actually introduce fragility into the system as opposed to just letting things play out. And what have we seen every time there's been a crash?
More and more and more involvement. And what does its.
Sadly, that's where we're at. We've, our current economic state is the result of all of our other previous mistakes. Has it introduced growth? Yes. Have some people gotten wealthy as a part of it? Sure. But has it truly been a benefit for everyone? Well, maybe, that's debatable, so. Now, it doesn't mean that we should, everybody should get equal amounts out of the economy and all this stuff, right?
That's not what I'm saying whatsoever. It's just big picture. We can't, so much of the economic policy is looking at small parts of the economy as opposed to the whole thing and just letting it operate as itself, and that, you know, those of us who are more of a, you know, a frequent free market sort of mentality.
That's what we've been striving to hopefully get to at some point, but we haven't had anything like that since probably the, you know, mid 18 hundreds or so.
Luke Tatum: Definitely not, in favor of like a UBI type program, you know? Definitely gonna stay clear of that one and not a fan. Maybe we do an episode on that sometime it pops back into the news at some point.
Andrew Yang always has something to say, right? That's his name, right? Anyway, so yeah, we have to cut this episode a little bit on the short side, this week and. I think we've basically said our piece anyway, so, you know, kind of keep your eye on these stocks if that's something that interests you.
I'm interested to know just how much of the overall S&P is driven, you know, by this, but it'd be a very, very interesting next few months as we see what happens with the war and the price of oil and some of these other factors playing into these things. But yeah, I mean, I'd say that. It is been a, it's been a good chat, gentlemen.
Outro and Free Toolkit [20:00]
Luke Tatum: I, wanna thank everybody for joining us again on this week's episode of the Between The Lies Podcast. Now of course, education and all that, talking about current events is good, but if you're here watching the show right now. Then, you know, you wanna do something tangible with your money. We will talk to you about the exact strategies that we deploy ourselves.
We've got a whole toolkit to talk about that. And it's gonna help you be equipped and ready for this kind of uncertainty in the geopolitics of the world. Right? So you can find all that perfectspiralcapital.com/podcast. And. We'll, hope to see you then. Also be sure to go check out Rob's channel.
He has a separate channel. Rob Brayton, PSC, here on YouTube where he's got tons and tons of great videos, really getting into the nitty gritty details on this stuff. So I think that's all I have, gentlemen. Anything else?
Rob Brayton: I'm good.
Luke Tatum: Thanks so much. We'll see you next week.
