How jumping on the biggest stocks - Nvidia, Apple and Microsoft - can hurt you

By Philip van Doorn

Also: How to broaden your exposure to semiconductor stocks, help with retirement planning, and a complex financial crime

If you had purchased shares of Microsoft Corp. at the end of last year, when it was the largest U.S. company by market capitalization, you would have fared well so far. The stock would have returned 19% through Thursday, while the S&P 500 would have returned 15.5%, both with dividends reinvested.

And now, with Nvidia Corp.'s (NVDA) shares returning 164% in 2024 so far, it makes up 7% of the portfolio of the $525 billion SPDR S&P 500 ETF Trust SPY - right behind Microsoft's (MSFT) 7.2% portfolio weighting and ahead of Apple Inc.'s (AAPL) 6.6%.

But investors need to be careful, as Mark Hulbert explained this week. Here is how an investor would have fared with a long-term strategy of buying shares of the largest company in the S&P 500 SPX at the end of each year.

Another long view: Wall Street's favorite strategist discusses how to be a better investor

Nvidia gets ahead of analysts that love the company

Nearly all analysts working for brokerage firms polled by FactSet rate Nvidia's stock a "buy," or the equivalent. But the brokerage industry is fixated on one-year price targets. Emily Bary looked at consensus price targets for Nvidia and dozens of other semiconductor manufacturers along with the highest price targets among analysts, to gauge how much growth potential they see over the next year.

More on Nvidia's stock action:

Apple offers a bullish lesson for Nvidia, even as the chip stock heads for a dipWill Nvidia spur a stock-split frenzy? Why companies have been waiting longer to split.Nine hot stocks, including Nvidia, that have become more attractive by this critical metric

Related tech-stock coverage:

Nvidia is one of the 'three horsemen of AI.' Here are the others.Broadcom just keeps getting bigger as it's deemed best AI stock besides NvidiaMicron's stock extends rally as analyst expects 'only positive news'

A different part of the stock market: This indicator suggests unloved small-cap stocks may be poised for a turnaround

And a non-U.S. market: I spent a week on the Chinese version of E-Trade. Here's what I found.

Thoughts on the AI business of Nvidia and other companies

Therese Poletti explained how the power needs for Nvidia's graphics processing units will increase the demand for liquid cooling, which can benefit these companies.

More from Therese Poletti: HP Enterprise may be an underrated AI play, and new deal with Nvidia could help

Broader plays on semiconductor stocks - with different levels of exposure to Nvidia

Investors looking for cheap diversification through index funds need to keep in mind that many are weighted by market capitalization. Nvidia makes up 7% of the S&P 500 and 11.4% of the $16 billion iShares Semiconductor ETF SOXX. In this week's ETF Wrap, Isabel Wang dug into several semiconductor ETFs to explain how they weight their stockholdings.

A different approach to the stock market - enhancing income beyond dividends

Here's how to increase income from an equity portfolio using a strategy that lowers downside risk for a price you might be willing to pay.

Will Hertz survive without another bankruptcy filing?

Hertz Global Holdings Inc. surprised investors this week by raising its estimate of coming net losses while also announcing a $750 million bond offering. Ciara Linnane covered the company's troubles and opportunities, as well as the action for its stock and its existing bonds, which are deeply discounted.

Watch out for this type of financial crime - protect your loved-ones

Lukas I. Alpert writes MarketWatch's Financial Crime column. As evidenced by his piece this week, it is frightening to consider how easily the elder members of our families can be victimized.

More financial crime: 'Jesus was the best affiliate marketer in the world': How a 'Reverend CEO' allegedly stole $1 billion in a crypto scam

Meet the 65-year-old professor who keeps putting off retirement - in a good way

The job of a gerontologist may be more important than ever, with an estimated 4 million people in the U.S. reaching the age of 65 this year. Beth Pinsker interviewed Pamela Teaster, a professor at Virginia Tech University, who has just turned 65 and keeps pushing back her potential retirement age. She has just started to work as an EMT, which has spurred her toward yet another career goal.

Watch out for hidden costs in this seller's market for homes

With a tight supply for housing in many markets, you might think that everything is in your favor if you are looking to sell. But you had better keep in mind how much selling-related expenses can add up. Aarthi Swaminathan breaks down the home-selling expense whopper and how it could affect your moving plans.

More: Home prices hit an all-time high, despite sluggish spring home-buying season

Help with retirement planning

Alessandra Malito writes MarketWatch's Help Me Retire column. One 67-year-old reader presented a challenging scenario - wishing to retire at 70 but worried about not having enough saved up.

And this couple was wondering when they should begin taking Social Security payments.

Wading into family financial fiascos

In his column - The Moneyist - Quentin Fottrell helps readers with all sorts of financial conflicts and other complicated money problems, on an almost daily basis. Here are some recent installments:

'His wife is manipulative': My father married a woman, 60, with no money, then changed his will. How can I preserve my inheritance?My husband and I are retired. We're invited to our niece's destination wedding. Are we obliged to buy a gift?'A few motherly words of wisdom can go a long way': My two adult sons will each inherit $100,000. What should they do with it?

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-Philip van Doorn

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06-21-24 1252ET

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