Supporting your premise: "Wealth Creation in the U.S. Public Stock Markets 1926 to 2019"Charles Joseph wrote: ↑Sun Jun 04, 2023 12:20 pmThings always are and always have been concentrated at the top. Studies show something like 4% of stocks account for 94% of market returns since the 1920s. The other 96% of stocks have earned the equivalent of T-Bills (these percentages are from memory but this is close!). That seems to be an essential characteristic of the market. Why would I want to miss out on those gains by doing something other than market-cap weighting?burritoLover wrote: ↑Sun Jun 04, 2023 12:00 pm...The point is, if you invest in a market-cap weighted fund, things can get concentrated at the top. It isn't a thing to react to, it is something you have to live with by choosing a narrow basket of stocks (large caps) of a single country...Charles Joseph wrote: ↑Sun Jun 04, 2023 10:24 amThe "latest narrative" merely provides a descriptive account of a connected set of events which informs the market's efforts to discount the current value of future company cash flows. That's what the market does. It's what the market is: it's a discounting mechanism.burritoLover wrote: ↑Sun Jun 04, 2023 7:42 am The US market has become a gambler's paradise. It's more investors trying to ride the wave of whatever the latest narrative is (currently AI), rather than any sane pricing of future earnings.
https://ssrn.com/abstract=3537838