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giugno 04, 2024

Stock Market Concentration: How Much Is Too Much?

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giugno 04, 2024

Stock Market Concentration: How Much Is Too Much?


Consilient Observer

Stock Market Concentration: How Much Is Too Much?

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giugno 04, 2024

 
 
  • Stock market concentration has increased sharply over the past decade, creating a challenging environment for active managers and also raising unease about the loss of diversification, the valuations of the largest stocks, and the effect of flows into index funds.
  • In this report, we look at concentration over the past 75 years to see where we stand today and to reflect on what it means for active equity managers.
  • We examine which companies have had the largest stock market capitalizations and how that population has changed.
  • We ask whether there is a correct level of concentration, both by comparing the U.S. to other global markets and by presenting the possibility that concentration was too low in the past.
  • We then seek to determine whether fundamental corporate performance supports the current increase in concentration.
 
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DEFINITIONS
Market Capitalization is the total dollar market value of all of a company's outstanding shares.

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The views and opinions are those of the author as of the date of publication and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. The views expressed do not reflect the opinions of all investment personnel at Morgan Stanley Investment Management (MSIM) and its subsidiaries and affiliates (collectively the Firm”), and may not be reflected in all the strategies and products that the Firm offers.

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