Why the Stock Market Might Be at Peak Concentration Risk

Odd Lots

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4.4 • 1.6K Ratings

🗓️ 24 January 2025

⏱️ 41 minutes

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Summary

There's a lot of talk right now about concentration risk in US equities. For instance, the top 10 stocks in the S&P 500 currently account for 38% of the total index, compared to just 17.5% a decade ago. And all the big winners have been tech companies like Apple, Nvidia, Meta, etc., prompting questions about whether investors are getting overly-enthused about AI. For some, it's also bringing back memories of the dotcom bubble. So just how concentrated is the US stock market right now? What exactly is "concentration risk" anyway? What does this trend say about the power of benchmark index providers like S&P? And -- crucially -- are market participants doing anything about it? In this episode we speak with Kevin Muir, a.k.a. the Macro Tourist, about why he thinks the market is now at "peak concentration," and what could change to reduce Big Tech's dominance.

Read more: Index Providers Rule the World—For Now, at Least
Nvidia and Five Tech Giants Now Command 30% of the S&P 500 Index

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