Felix Zulauf: Stocks To Crash A Gut-Wrenching 40% Next Year?
Thoughtful Money with Adam Taggart
The Risk of Index-Closeting and Concentration in Equity Investment
Over 80% of today's capital invested in equities is indexed or sort of indexed, leading to a heavy concentration in certain stocks. In large hedge funds portfolios, up to 70% of the capital is invested in just 10 stocks, representing extreme concentration. Furthermore, when investing in a world index, 62% of the assets go to the US, with 30% of that going to just seven stocks. This concentration poses a significant risk, as a market correction could lead to magnified and exaggerated declines due to the overweighting of certain stocks.
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