Valuation – Forward 12-Month P/E for S&P 500 While U.S. equities are trading at a premium to global stocks, this situation reflects both the strength of the U.S. market and economy. But there are potential risks associated with high valuations and market concentration. Image: Bloomberg
S&P 500 Earnings and Estimates While strong earnings growth projections for 2025 provide a positive backdrop for potential market performance, investors should remain vigilant due to high valuations and market concentration. Image: Real Investment Advice
Valuation – Median Forward P/E While there are valid concerns about high valuations and market concentration, the present situation of the 10 largest U.S. stocks differs significantly from the dot-com bubble of the late 1990s. Image: Goldman Sachs Global Investment Research
Market Capitalization of the Largest Stock Relative to the 75th Percentile Stock While stock market concentration can lead to significant gains during bullish phases, it also poses risks of increased volatility and corrections when investor sentiment shifts. Image: Goldman Sachs Global Investment Research
Equal-Weight vs. Aggregate S&P 500 10-Year Trailing Relative Returns Current market conditions suggest that investors might benefit from considering an equal-weight strategy for the S&P 500, especially in light of the significant concentration observed in the index. Image: Goldman Sachs Global Investment Research
S&P 500 Volatility The concentration of large-cap stocks has significantly impacted market volatility, with these stocks accounting for a record share of it. Image: Goldman Sachs Global Investment Research
The Five Largest Stocks in the S&P 500 The concentration of the S&P 500 in the 5 largest stocks is higher than it was 60 years ago, which is considered a potential risk, as it may result in increased market volatility and a lack of diversification. Image: Bianco Research
Top 10 Stocks as % of S&P 500 In recent years, there has been a substantial rise in concentration among the top 10 companies in the S&P 500, which has raised concerns about potential risks to investors. Image: Goldman Sachs Global Investment Research
30 Largest Stocks as a Percentage of S&P 500 Market Capitalization The 30 largest stocks account for 53% of the S&P 500’s total market capitalization, raising concerns about the index’s concentration and potential risks. Image: Morgan Stanley Wealth Management
Stocks – Indexed Consensus NTM Net Income The widening gap in expected net income between mega-cap tech stocks and the bottom 493 stocks of the S&P 500 highlights the concentration risk and volatility associated with the dominance of these tech stocks in the index. Image: Goldman Sachs Global Investment Research
U.S. Stocks – Magnificent Seven Market Value as a Percent of S&P 500 Market Value The concentration of the Magnificent Seven U.S. stocks has a significant impact on the performance of the S&P 500. While these stocks have performed well, the over-reliance on them poses potential risks for investors. Image: BofA Global Investment Strategy