Apple Worth As Much As Entire Russell 2000 Index?

APPLE WORTH AS MUCH AS ENTIRE RUSSELL 2000 INDEX?

In another sign of these unusual times, the chart below illustrates another potential milestone for Apple. Exceeding the value of the entire Russell 2000 index! The narrowing of the valuation gap has occurred within the past year, with Apple rising 52% year-to-date as of August 18 versus a decline of 7.5% by the Russell 2000.

The merits of Apple have played a role in its appreciation but the dramatic gains of the past year owe more to the enormous capital flows being directed into the largest companies by passive investors and the emergence of a new generation of retail investors who trade the FAANG stocks et al.

One company having a similar value to an index of 2000 listed companies is not sustainable long-term, in our view. The question is: will Apple retreat in price or will the Russell 2000 undergo a major bull market in the years ahead?

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