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Since the launch of ChatGPT at the end of 2022, the S&P 500 has been on a tear. With every other stock market, including the FTSE 100, left behind, Wall Street analysts expect 2025 to be another stellar year for the US. I, though, believe 2025 is likely to be a much tougher year for US index investors.
Concentration of stocks
One of the biggest risks for the S&P 500 in 2025 and beyond is extreme concentration. A few years ago, it was the FAANG stocks that were the darlings of the market. Today, it’s been rebranded as the Magnificent 7.
Call it what you like, but a stock market that is being propped up by just a handful of stocks makes no sense to me.
On top of the concentration risk, is the fact that virtually everyone is on one side of the boat. Not only US investors have piled into the S&P 500 but so has the rest of the world.
Smart money is out
When individuals like…
