Something Has Gone Terribly Wrong
Summary
Joseph addresses the significant performance gap in 2026 between Joseph's portfolio, which is up only 1.3%, and the S&P 500, which has risen 13.2%. Joseph explains that 85% of the index's gains are driven by just two sectors: semiconductors and tech hardware. Joseph highlights that 90% of companies in the S&P 500 have contributed less than 2% to the overall return, creating an unusually concentrated market that makes stock picking difficult for those not invested in AI 'picks and shovels.'
Joseph emphasizes that long-term stock performance is driven by revenue growth, which accounts for 74% of returns over a ten-year period. Joseph's analysis shows that Joseph's portfolio has grown revenue 2.1 times faster than the S&P 500 in the trailing twelve months and is projected to grow 15.8% next year compared to the index's 11%. Joseph concludes that staying the course with companies exhibiting organic, linear growth is preferable to investing in volatile companies that remained flat for a decade before a sudden surge.
Mentioned Stocks
Reasoning: Joseph is very positive about Microsoft's new transparency regarding Azure revenue. Joseph notes that breaking out this data allows for better analysis and comparison against competitors. Joseph believes the company is moving in the right direction by trimming its operating segments and providing clearer financial pictures.
Reasoning: Joseph highlights Google's legal victory in avoiding a breakup of its business. Joseph states that this decision effectively closes a long chapter of antitrust risk for Google. Joseph believes the resistance from judges to split the company is a strong signal of stability for investors.
Reasoning: Joseph uses Costco as a benchmark for the type of organic growth Joseph looks for in Joseph's portfolio. Joseph mentions Joseph's first buy was around $160 in 2017 and praises the stock's linear growth over the past decade. Joseph prefers this steady performance over the 'breather' some semiconductor stocks took for years before spiking.
Reasoning: Joseph supports the potential spin-off of Capital IQ Pro. Joseph explains that S&P Global is moving toward a higher-margin data business and away from the competitive user interface market. Joseph argues that owning the 'music labels' (the data) is better than owning the 'Spotify' (the interface).