How the “Magnificent Seven” misleads
Forget the supergroup of stockmarket darlings
![Illustration of seven horses in the shape of a seven, with circles and arrows over them, like a game plan](https://www.economist.com/cdn-cgi/image/width=1424,quality=80,format=auto/content-assets/images/20240330_FND004.jpg)
All models are wrong, goes the statisticians’ adage, but some are useful. This time last year, plenty of pundits’ models started looking more wrong and less useful. The consensus forecast was a grim spell for economic growth and a dreary one for stock prices—and that was before a clutch of American regional banks buckled. Higher interest rates seemed set to cause pain everywhere. Instead, in the very country where the banking turmoil unfolded, the stockmarket began to soar. By the summer America’s S&P 500 index of leading shares had risen by 28% from a trough hit the previous autumn. Analysts hunted for a new model to explain what was going on, and the popular choice revolved around the “Magnificent Seven”.
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This article appeared in the Finance & economics section of the print edition under the headline “AI revoir”
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