A few days ago, I saw the report from UBS. Today, we saw that the top 10% of US stocks by market capitalization currently account for around 76% of the US stock market, reaching a historic high, which is worth paying attention to. In history, such moments have occurred three times. The first time was after World War II, in the 1940s, when large companies were the absolute mainstay in the market with a very high proportion. At that time, the US economy had just recovered from the war, and some traditional industry giants, such as automobiles and steel, were truly dominant. But over time, in the 1960s and 1970s, this proportion gradually decreased. Why? Due to the diversification of the economy, many small and medium-sized enterprises have emerged, and various new technologies and models are constantly emerging. The market vitality is strong, and everyone has opportunities. So, the brilliance of those big companies was shared. In the late 1980s and early 1990s, this trend turned around again. The most obvious is around 2000, which is often called the "Internet foam" period. At that time, tech giants like Cisco and Microsoft were in the limelight, with their market value skyrocketing like a rocket. As a result, the foam burst. Look at the sharp peak, which is the reflection of that time, and then it poured down thousands of miles. Alright, that's the point. Let's take a look at the area on the far right that I circled in red. In recent years, this proportion has started to skyrocket again and has already surpassed any historical high point! What does this mean? This indicates that the head effect in the current US stock market is unprecedentedly strong. Simply put, the majority of money and attention in the entire US stock market are concentrated on a small group of super giants. These companies are the so-called "seven sisters", such as Apple, Microsoft, Nvidia, Google, Amazon Meta、 Tesla. Do you guys talk about these companies every day when you open the news? Their stock prices rise, and the index follows suit; They fell, and the market basically followed suit! In fact, the current problems in the US stock market have also been pointed out in the UBS report, which is worth pondering: Risk concentration: It's like putting all your eggs in one basket. If one or several of these giants encounter problems, such as underperformance or regulatory troubles, the entire market will be greatly impacted. We small investors may suffer along with it. Narrowing market breadth: This phenomenon indicates that many small and medium-sized enterprises, or companies that are not in the spotlight, may be being overlooked by the market. The entire market seems to lack the vibrant and diverse scene of the past. Value mismatch: Sometimes, I wonder if the valuations of these giants are too high? Can their growth story really sustain such a high market value? This is a question mark that I often have in my heart. In short, caution makes a ship of ten thousand years! 🧐