Stock market concentration is the highest since the 1930s, should investors worry?
Concentration is rising everywhere. Looking at history, that could be be a worry, because innovation has typically come from smaller companies. But this concern seems less relevant in todays winner takes all economy
What might concern investors is how high market concentration impacts future investment returns. Concentrated portfolios are more idiosyncratic and less diversified. Plus, if concentration is in the most expensive parts of the stock market - as it is today - it implies weaker medium term investment returns
A good reminder to be dynamic in portfolio allocation! Dont just set it, forget it, and regret it!
