‘Concentration Risk’ In S&P 500 Has Never Been Higher

‘Concentration Risk’ In S&P 500 Has Never Been Higher

Earnings from America's tech behemoths were widely described as "mixed" for the third quarter. The veracity of that characterization depends on your definition of "mixed." Yes, Amazon and Apple flagged rising costs and lost sales associated with lingering pandemic effects and supply chain disruptions, but generally speaking, the FAAMG cohort (which will need to be rechristened now that Facebook is no longer Facebook) delivered the usual compendium of unfathomably large numbers. Simply put, it'
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5 thoughts on “‘Concentration Risk’ In S&P 500 Has Never Been Higher

    1. GAMMA! Great idea.

      On another note, as we rush to window dress for year end, it looks like a NVDA is the “new Apple”, as in “we gotta show on NVDA on our year end statements.” It may ruin your great GAMMA moniker.

  1. It is worth noting that the fact that the FAAMG companies, or whatever we call them, enjoyed a rise in revenues 3x the average top-line growth for all other firms in the market, while only growing profits 2x as fast as the rest, while perhaps impressive, is clear evidence that these top firms are growing less efficient in their production of returns from capital used. When revenue grows faster than profits it means margins are declining, something that typically happens to firms who cut prices to try to grow sales. In the long run, such a strategy will doom these firms to mediocrity.

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