Landon Capital

U.S. Market Concentration Hits Record High: A Feature, Not a Bug

The U.S. equity market’s concentration is now so intense it could make a monoculture farmer blush, sparking justified fears that putting the market’s fate in the hands of a select few stocks might end in a melodramatic finale. This lack of diversification has not only stoked bubble speculation but also turned the task of beating the benchmark index into a Herculean labor for both active and passive managers, given that a handful of titans are steering the ship. However, it’s not necessarily a disaster in waiting.
Historically, such market dynamics are not unprecedented. Remarkably, rising concentration has often coincided with higher average returns, underpinned by strong fundamentals during tech booms. Michael J. Mauboussin and Dan Callahan’s deep-dive analysis for Morgan Stanley Investment Management reveals that, despite the current buzz, the U.S. market is still one of the least concentrated among global equity markets. In fact, at the end of last year, only India, Japan, and China were less concentrated. America’s current landscape, driven by a booming AI and tech sector—particularly Nvidia—means the top 10 stocks now account for a record 35% of the U.S. market cap. Yet, Mauboussin and Callahan note that globally, the top 10 stocks in various markets averaged a 48% weighting from 1989 to 2011, putting the current concentration in a less alarming historical context.
The real kicker? The top three U.S. companies—Apple, Nvidia, and Microsoft—now command 10.6% of global market cap. But this isn’t necessarily a bad thing. From 2014 to 2023, these top stocks have disproportionately contributed to U.S. earnings, with their market cap share rising in tandem with their profit share. Historical data shows that periods of rising concentration in the S&P 500 often yield above-average returns, with cautionary tales from the late 1990s dotcom boom reminding us to manage expectations.
Ultimately, while today’s market concentration might feel unprecedented, it’s more a feature than a bug of the U.S. stock market. Hendrik Bessembinder’s research underscores this trend, showing that, despite the risks, increasing concentration has been enhancing shareholder wealth for nearly a century, creating a landscape where the biggest winners take it all, and then some.

Amazon and Vrio to Challenge Starlink with Satellite Internet Across South America

Amazon (NASDAQ) and telecommunications giant Vrio are joining forces to launch a satellite internet service across seven South American countries, setting the stage for a showdown with Elon Musk’s Starlink.

Vrio, the U.S. company overseeing DirecTV Latin America and Sky Brasil, will roll out the service in Argentina, Brazil, Chile, Uruguay, Peru, Ecuador, and Colombia.

Amazon’s Project Kuiper, brainchild of a former Starlink employee, will deploy satellites in low Earth orbit to beam internet to underserved areas.

About 200 million people in the region have poor, little, or no internet access. Couple that with challenging geography and limited infrastructure investment, and you’ve got a recipe for disruption.

The service aims to go live in mid-2025, kicking off in Argentina according to Project Kuiper’s rollout plan.

Bruno Henriques, head of Latin American business development for Project Kuiper, revealed plans to launch 3,236 satellites.

Amazon, which committed $10 billion to the project in 2019, envisions equal broadband access for urban, suburban, and rural customers alike.

Investing on a Thursday is like catching the financial markets right before they head to their weekend happy hour. It’s the sweet spot where the week’s dramas have unfolded, the trends are more apparent, and the market’s mood swings are a tad more predictable—like how your co-worker inevitably spills the beans about their Friday night plans by Thursday afternoon. It’s a day when savvy investors can make moves with a clearer picture, positioning themselves for the weekend like a chess master setting up for checkmate. So, don your analytical hat, sip on that extra shot of espresso, and dive into Thursday’s financial fiesta—because in the world of stocks, Thursday is the new Friday.