“The top 10 stocks in the S&P 500 account for an outsized share of the index’s market cap and of its stellar 2024 performance. So, just how anomalous is today’s equity market concentration, and how worrying is it? GS’ David Kostin argues that the unusually high concentration warrants investor concern because history suggests that high concentration is associated with lower long-run returns. But Acadian’s Owen Lamont thinks worries about concentration are overblown, arguing that concentrated markets aren’t inherently riskier and don’t portend future poor performance, though high valuation often does. At the heart of the matter is whether the outperformance of today’s dominant stocks can persist over the longer term.”
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Morten W. Langer
