Equity market capitalization is more concentrated now than it’s ever been in over fifty years. What does this mean for investors?
- The top five companies in the S&P 500 composed approximately one-quarter of the index as of December 2023 (source: FactSet). This intense concentration has implications for investors’ portfolios, but we believe now is the time when investors may want to explore other areas of the market capitalization spectrum outside the mega-cap technology stocks. Alger Director of Market Strategy, Brad Neuman, shares more in his commentary, Are You Concentrating Too Much?
- Could thinking long-term “improve” your odds and potentially help investors ride out inevitable market fluctuations? Data suggests that the worst return of equities is over a one-year time frame. On the other hand, over a 20-year rolling period, stocks outperformed bonds 100% of the time.
- In one of our latest Alger On the Money updates, we noted how dividends and share repurchases have been significant drivers of equity performance over the long term. One particular sector which we believe has experienced a significant shift in capital discipline is energy. Read more in our article, Capital Returns.
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