N※N

Thanksgiving Trading Alert: Avoid the 'Turkey Trap' in Big-Tech Stocks

  //stocks-investing.news-articles.net/content/202 .. rt-avoid-the-turkey-trap-in-big-tech-stocks.html
  Published in Stocks and Investing on Thursday, November 27th 2025 at 12:48 GMT by Forbes

• 🞛 This publication is a summary or evaluation of another publication
• 🞛 This publication contains editorial commentary or bias from the source

2025-11-27 215 x 224 / 9915 Bytes

2025-11-27 179 x 224 / 13465 Bytes

2025-11-27 179 x 224 / 18231 Bytes

2025-11-27 224 x 224 / 6061 Bytes

Thanksgiving Investing: Avoid the Turkey Trap in Magnificent 7 Stocks
By Bill Stone – Forbes, November 27, 2025

Bill Stone’s November 27 Forbes piece is a timely warning for investors who are tempted to ride the holiday‑weekend rally into the big‑tech stocks that have dominated market headlines for years. Titled “Thanksgiving Investing: Avoid the Turkey Trap in Magnificent 7 Stocks,” the article draws a line between the festive optimism that sweeps markets in late November and the very real risks of over‑exposure to the sector’s leaders. The piece is anchored by the concept of the “Turkey Trap” – a buying pattern that sees investors pile into the Magnificent 7 (Apple, Amazon, Alphabet, Microsoft, Meta, Tesla, and Netflix) just before Thanksgiving, only to miss out on the after‑holiday rebound if the stocks have already reached a high valuation.

1. What is the “Turkey Trap” and why it matters this year?

Stone opens by describing the Thanksgiving trading window as a classic “bargain‑hunt” for many traders. Historically, the last two weeks of November have shown a tendency for equity prices to lift after the “Black Friday” sales rush, often delivering a short‑term upside for equities that have been dragged down by the winter slowdown. In a sense, the holiday weekend offers a “window of opportunity” for those who believe that the market will bounce back. The problem arises when investors, influenced by that optimism, dump cash into the same handful of high‑profile stocks—specifically the Magnificent 7—just before the holiday. The stocks, already trading at lofty multiples, can either under‑perform or become even more volatile after Thanksgiving, leaving the investor at a loss when the markets cool.

Stone stresses that the Turkey Trap is not a new phenomenon; it has been documented by other researchers and analysts, and there are several recent examples. For instance, in the 2023 holiday cycle, Apple and Tesla experienced a sharp correction in the week after Thanksgiving. The article links to a Bloomberg piece that analyses the post‑holiday price action for the sector, underscoring how the holiday bump can be more of a “sell‑off” than a “bump” for these stocks.

2. The Magnificent 7: a brief refresher

The article takes a quick detour to define the Magnificent 7, a label that has gained traction in the wake of the pandemic‑era “big‑tech” boom. The group includes:

Stone points out that while these companies have been the mainstay of many index funds, their valuations have diverged significantly from the broader market. He includes a link to a FactSet report that tracks the trailing 12‑month P/E ratios of the Magnificent 7 versus the S&P 500, illustrating the widening gap.

3. Macro environment: rates, inflation, and growth expectations

The core of Stone’s analysis is the macro backdrop. He argues that the late‑2025 environment—characterized by higher interest rates, persistent inflationary pressure, and a slowdown in global growth—has made the Magnificent 7 even more vulnerable. The article cites the Federal Reserve’s March 2025 policy statement, which marked the second consecutive rate hike, and links to the Fed’s minutes to underscore the tightening stance. Stone also references a Reuters article on the rise in U.S. Treasury yields, noting that the yield curve steepening is especially damaging for growth‑heavy names.

Stone points out that the sector’s business models are heavily reliant on discretionary consumer spending and tech‑related debt financing. When rates rise, borrowing costs climb and consumers reduce spending on premium electronics, streaming, and EVs. Additionally, the article links to a study by the National Bureau of Economic Research (NBER) that predicts a slowdown in the technology investment cycle due to higher discount rates.

4. Why the Magnificent 7 are particularly prone to the Turkey Trap

• High valuation multiples: Stone cites data from Yahoo Finance that shows the P/E ratio for Apple is now 28x versus the S&P 500 average of 17x, and that Tesla’s forward P/E is 35x, an extreme level for a company that still reports relatively low earnings growth.
• Media hype vs. fundamentals: The article references a CNBC interview with an equity research analyst who warned that media coverage can overstate the growth prospects of these companies, creating a “halo effect” that can mislead casual investors.
• Profit‑taking windows: Stone explains that as the holiday season approaches, many institutional investors take profit positions in their tech holdings. He cites a Bloomberg article that tracked large‑cap institutional selling of the Magnificent 7 in late November 2024.

Stone also highlights the risk that these stocks can act as “leverage” for a portfolio: a 10% move in the Magnificent 7 can swing the market’s composite indices by more than 5%.

5. Alternative strategies for the Thanksgiving window

To counter the Turkey Trap, Stone offers a set of pragmatic recommendations that investors can incorporate into their holiday trading plan:

1. Diversify outside the tech bubble
   - The article suggests adding “value” or “cyclical” sectors that typically outperform during a rate‑tightening cycle, such as consumer staples (Procter & Gamble, Coca‑Cola) and industrials (General Electric, Caterpillar).

2. Consider dividend‑yielding staples
   - Stone links to a Motley Fool article that highlights high‑yielding stocks in utilities and telecoms, which can provide a steadier income stream during periods of market volatility.

3. Use ETFs for broader exposure
   - The Forbes piece points to an ETF like the Vanguard Dividend Appreciation ETF (VIG) as a lower‑risk alternative, offering exposure to companies with strong dividend histories while mitigating the tech over‑concentration.

4. Add a small position in cash or short‑term Treasuries
   - Stone advises maintaining a 5–10% cash cushion in a high‑yield savings account or a 30‑day Treasury bill, to avoid being forced into the Magnificent 7 just because other options look “dry.”

5. Set stop‑loss orders for tech holdings
   - For those who wish to keep a small stake in the tech sector, the article recommends placing a tight stop‑loss (e.g., 10% below entry) to protect against a sudden pullback post‑Thanksgiving.

6. Conclusion: The holiday lesson

Bill Stone closes by reminding investors that holiday trading windows can be attractive because of the market’s tendency to rally after Black Friday sales. However, the holiday period also amplifies the risk of “buying the dip” into already over‑valued stocks. The Magnificent 7, while still giants, are not immune to market corrections, especially when macro‑economic conditions—interest rates, inflation, and consumer sentiment—start to tighten. Stone’s key takeaway: “Treat Thanksgiving as a chance to review your portfolio, not a reason to chase the next big tech rally.”

He encourages readers to consult a financial professional if they are unsure how to adjust their holdings, and reminds them that the best defense against the Turkey Trap is a well‑diversified portfolio that is resilient to both macro shifts and sector‑specific headwinds.