The cliché that a rising tide lifts all ships points out that in a bull market most stocks move up. Multiple times in the past 40 years, however, the market tide allowed some stocks to rise much more than others.

There is concern that the S&P 500 (S&P) is too concentrated in a relatively small number of stocks. This is underscored by the fact that as of February 14, 2020, the 10 largest individual stocks (1.9% of the all stocks in the S&P) were 23.9% of the entire S&P 500 capitalization, the fourth-highest percentage in the past 40 years. The three highest top-10 percentages were 25.54%, 25.47%, and 24.96% respectively in 1980, 1999, and 2001. The smallest percent of the top-10 S&P 500 components occurred in 2014 at 17.51%. It is noteworthy, however, that in exactly half of this 40-year span, the top-10 weighted stocks in the S&P 500 were more than 20% of the index. Through the past 40 years, the average representation of the top-ten largest weighted stocks was 20.63%. Backing out the six biggest percentages still leaves an average for the remaining years at 20.01%.


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