The Fallacy of Concentration
Abstract
Many investors believe that the US stock market is riskier than it has been historically because a large fraction of its capitalization is concentrated in a few large technology companies. Some investors, therefore, conclude that they should rebalance their portfolios toward safer assets. The authors present clear evidence that the US stock market has indeed become more concentrated. However, they present practical and conceptual arguments along with persuasive empirical evidence that challenges the notion that investors should act to offset concentration.
Fields of Study & Subjects
Financial Markets and Investment Strategies
Complex Systems and Time Series Analysis
Corporate Finance and Governance
Publication details
- Journal / source
- Financial Analysts Journal
- Publisher
- Informa UK Limited
- Volume
- 82
- Issue
- 2
- Pages
- 8–18
- Publication date
- 3 April 2026
- Language
- EN