We all get this, but just for old times’ sake, let’s go over the poster child for market vulnerability once again. Concentration and high valuations especially coming from technology. And in technology, specifically looking at FANMAG. (The redoubtable FAANG with Microsoft added in.)
There are any number of ways to put it — and some ways are more dramatic than others; in some constructions, the market is actually down when you take the top stocks out — but there are two facts of life for the market right now:
1. Huge concentration.
As shown in this chart, the top ten stocks make up 25% of the market cap for the S&P 500. (The top five make up almost 20%.) And it is a lot more dramatic for the Nasdaq.
.jpg "26-S&P 500 Concentration (Sunday, September 5, 2021)")
