As noted in the presentation referenced in the source material, “a graph showed that the top 10 stocks represent a bigger chunk of the market than they did during the 1990s internet bubble.” When asked why not go further back, CRSP’s Director of Index Analytics pointed out that the current level exceeds even the 1930s peak.
A Historically Top-Heavy Market
Looking at “CRSP’s 100 years of US stock market data,” the article notes that “concentration levels used to be far higher.” From “the 1920s to the late 1960s, the weight of the top 10 stocks regularly exceeded one-fourth of overall market value.”
A multidecade broadening followed. “Then came a multidecade broadening that spanned the bear market of the 1970s and the bull markets of the 1980s and 1990s.”
It was not until “the late 1990s tech, media, and telecom bubble inflated the share prices of behemoths like Intel, Cisco, and General Electric that the top 10 collectively crossed 20% share.”
The pattern has historical precedent. “The top-heavy market dynamic persisted for a couple of years beyond the popping of the bubble in March 2000, similar to how the 1932 concentration peak came after the crash of 1929.”
The most recent surge began again in 2020. “The top 10 didn’t breach 20% of market value again until 2020.” The pandemic “accelerated long-running technology trends,” and the group that began as FANG expanded into multiple acronyms.
After “a bear market in 2022, the launch of ChatGPT sparked an AI frenzy that has taken concentration to new levels.” The “era of the ‘Magnificent Seven’ and the ‘hyperscalers’ saw Nvidia’s market value hit an astounding $5 trillion in late 2025.”
Echoes of the Roaring ’20s
“Any mention of the 1930s in an investment context raises alarm bells.” The source notes parallels between the 1920s and today.
“The 1920s, like the 2020s, was a time of technological transformation.” The largest companies in 1932 reflected “an era in which automobiles, radio, and telecommunications were going mass market. Electrification was spreading.”
Wealth inequality was high. Business leaders were widely known.
Quoting Andrew Ross Sorkin’s 1929, the article notes: “But the greatest product… the one that made all the others possible, was credit. Buy now, pay later. It was a kind of magic.”
Credit expansion was central in both periods. “Credit card debt has reached record levels. Balances in margin accounts exceeded $1.2 trillion in December 2025, up 36% from December 2024.”
Speculative behavior also draws comparisons. “It wasn’t called ‘FOMO’ in the 1920s, but speculative excess was everywhere.” References are made to “stock pools,” “bucket shops,” and Wall Street fortunetellers.
Today, “mobile apps blur the line between investing, sports gambling, and prediction bets.”
Competing narratives persist. In the 1920s, Yale’s Irving Fisher declared: “Stock prices have reached what looks like a permanently high plateau.” Economist Roger Babson countered: “A crash is coming.”
Recently, contrasting headlines have appeared side by side: “Why the AI Bubble is Poised to Burst” and “Nvidia Earnings: No Signs of a Near-Term AI Bubble.”
Concentration Is Not a Market-Timing Signal
The article emphasizes that “concentration doesn’t necessarily indicate a bubble, but it is a risk factor.”
It cautions that “market concentration is not a good predictor of market stress.” Historically, “top-heavy markets have produced some phenomenal returns.”
The Morningstar 2026 Global Investment Outlook states that although the top 10 surpassed their internet bubble levels by late 2020, “an investor who stepped aside then would have missed several years of exceptional gains, notwithstanding a brief setback during the inflation-driven selloff of 2022.”
The implication is explicit: “market-timing is to be avoided.”
“Concentration is neither bad nor good, per se,” writes Morningstar’s Manager Research team in Bold Portfolios: Are They Worth Their Risks? Concentration “can be great for returns when market leaders are rallying.”
However, “even if concentration doesn’t guarantee a downturn, it erodes diversification benefits and makes markets more vulnerable to sentiment reversals.”
Sector and Thematic Concentration
Concentration is not limited to individual stocks. “Sector concentration levels in today’s US stock market have risen, too.”
“The technology sector dominates to an even greater extent than in the late 1990s.” That assessment does not include companies classified outside technology, such as Alphabet and Meta in communication services or Amazon in consumer cyclical.
Thematic concentration is also rising. “As the hyperscalers up their AI bets, their fortunes become increasingly tied to an uncertain new technology.”
“AI has been the source of significant market volatility. Its capacity for disruption has been on full display lately.”
Only time will determine “how the market rotations we have seen in early 2026 will play out.”
Diversification as a Response
The article notes that “many funds have had to register as ‘nondiversified’ with the Securities and Exchange Commission.” Even “broad market index funds may run afoul of diversification requirements defined under the Investment Company Act of 1940.”
For investors concerned about concentration risk, alternatives are available. “If you’re uncomfortable with the top-heavy nature of the US stock market, you don’t have to own the market.”
Options include:
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“Take a selective approach either on your own or by investing with an active stock-picker.”
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“Through passive funds, you can equal-weight stocks.”
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“You can tilt toward value, dividends, smaller caps, or undervalued, high-quality companies.”
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“Or you can just balance your broad US market exposure with other assets, like international equities, bonds, and more.”
“In other words, you can diversify.”
“Diversification is the only free lunch in investing,” the article concludes.
“The future is inherently uncertain. As investors, all we can do is spread our bets and build portfolios to weather different scenarios.
