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Earning Man

The Compound and Friends

NOTE

Market Dynamics Favor Active Management

Current market conditions favor active management as large-cap stocks experience declining market capitalizations while broader market participation increases. The shift away from a heavily concentrated index, reminiscent of the tech bubble, indicates that a significant proportion of stocks are now on an upward trend. Unlike the 2000 scenario where the S&P rose despite 75% of stocks declining, the present market shows strong performance in equal-weighted indices, with 80% of stocks trending positively. This suggests a healthier market environment with more opportunities for active management strategies to succeed, reducing the likelihood of repeating past market distortions.

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