Stocks Are Doing Fine

The Stock Market is Not

Author

Michael Batnick
April 02, 2025

The outcome always feels obvious after it happens.  

Hindsight bias gives us the confidence that we know what’s going to happen next time, when, in reality, it should serve up the opposite lesson.

I’m afraid we’re about to swallow an enormous dose of this with the current administration.

Two possible outcomes; Trump is dead serious about tariffs. He’s going to go through with it no matter how much pain it inflicts on the economy.

He recently said, “I couldn’t care less, because if the prices on foreign cars go up, they’re going to buy American cars…I hope they raise their prices, because if they do, people are going to buy American-made cars. We have plenty.”

If these policies tank the economy and the market, everybody is going to be singing the same chorus. “HE TOLD YOU HE WAS GOING TO DO THIS. HE CAMPAIGNED ON IT. WHY DIDN’T YOU BELIEVE HIM?!?!?!?!”

Or.

Trump softens up. He makes a deal and quiets the chaos he created. He’ll call it a yuge win for America. And everything goes back to the way it was. Mag 7 leads the way as we hurl towards an AI revolution. And everybody will be singing the same chorus. “HE’S A RICH GUY. YOU THOUGHT HE WAS GOING TO TANK THE MARKET?!?!? HOW DUMB ARE YOU?

This will be the most obvious outcome ever in hindsight. 

Write down what you think is most likely. In sharpie. Right now. And if you’re wrong, it will serve as a reminder that you did not, in reality, know what would happen.

There’s an interesting dynamic playing out in the market right now. Stocks are doing fine. The stock market is not. Check out this killer work from chart goat Matt.

Every Mag 7 stock is in a 20% drawdown except for Apple. The group is down 15% year-to-date. The S&P 493 is up 0.5% this year. This feels…weird. Wait, you’re telling me that if the Magnificent 7 were removed from the index, then the S&P would be up on the year? Yes, that is what I’m telling you.

The tech giants came into the year carrying the market, and as a group, reached 35% of the overall index. Now they’re down to just over 30%. Still enormous, obviously, but a big decline from January.

Josh and I covered this and much more on yesterday’s What Are Your Thoughts?