Stock Market Highs & Concentration: What Investors Should Know
- Holzberg Wealth Management
- Aug 20
- 6 min read
Updated: Aug 21
HWM Market Recap - August 2025
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With another month of market gains behind us, three questions keep coming up in conversations and headlines alike:
Should we worry about market concentration?
Do new market highs mean a downturn is around the corner?
What does all of this mean for your financial plan?
Market Concentration: Déjà Vu?
Recently, considerable attention has been focused on the significant influence a handful of giant companies exerts in the market. The top ten holdings of the S&P 500 make up almost 40% of the index. Seven of those ten companies, coined the “Magnificent Seven” – Apple, Microsoft, Alphabet, Amazon, Meta Platforms, Nvidia, and Tesla – alone make up about 34%. Understandably, that level of concentration raises eyebrows.
But this is not the first time we have seen high market concentration.
1960s–70s: The “Nifty Fifty.” These fifty popular large-cap stocks, including Xerox, IBM, Polaroid, and Coca-Cola, made up about 30% of the S&P 500. Many were viewed as “one-decision” stocks: you could buy them and never sell. They powered the bull market of the early 1970s before crashing in the 1973–74 bear market.
1990s–early 2000s: The dot-com era. Technology and telecommunications companies dominated as the internet boom sent the Nasdaq up fivefold before the bubble burst. At its peak, the ten largest companies made up nearly 26% of the S&P 500.
What is striking is how much turnover happens at the top. None of the Nifty Fifty remain in today’s top 10 of the S&P 500, and since 2000, only one company has remained. Can you guess which? Stick around to the end to find out which.
So, should investors fear concentration? History suggests no.
Since 1965, the market’s inflation-adjusted rate of return has averaged about 6% annually.
Since 2000, it has been about 5% per year.
And, the long-term average over the past century has been around 7% per year.
In other words, even after periods of high concentration, markets have performed roughly in line with history and well above inflation (about 3%).
Market concentration is not a sign that the system is broken; it is a reflection of what is working. Corporate leadership changes, industries evolve, and capital flows to where it is most productive. That natural selection process has historically supported long-term growth, not undermined it.
Could these companies stumble? Absolutely. Will they eventually be replaced at the top? History indicates that, at some point, probably. The key is not predicting when today’s winners will be replaced; it is staying diversified so you do not need to guess.
Market Highs: A Reason to Worry?
It is human nature to think, “If the market is at record highs, surely the only direction left is down.” But the data tells a different story.
First, let’s put this year’s performance into perspective. Despite dramatic headlines and bouts of volatility, the market’s returns so far have been fairly average.
This reinforces one of our core investing principles: have a plan in place that allows you to stay disciplined through both ups and downs.
Even so, record highs can feel unsettling. Should we be worried?
Historically, markets have delivered above-average returns in the 12 months following new highs. Extend the lens to two or three years, and returns tend to normalize to long-term averages – not collapse.
This counterintuitive pattern reflects the market’s natural bias toward growth. New highs are not necessarily warning signs. More often, they represent progress. The bigger risk is not the next dip; it is missing the compounding power that comes from staying invested.
Building Antifragile Financial Plans
If market concentration is not a crisis, and new highs are not necessarily a red flag, what does that mean for financial planning? The answer lies in building portfolios that not only survive volatility but also grow stronger from it.
Author and risk analyst Nassim Nicholas Taleb, best known for his work on probability and risk, introduced the concept of antifragility – systems that improve when exposed to stress and shocks. In simpler terms, it is like a muscle that gets stronger when it is exercised. Applied to investing, antifragility means designing portfolios with built-in flexibility.
Applied to investing, antifragility means designing portfolios with built-in flexibility:
Diversify broadly across asset classes, geographies, and time horizons.
Stay invested through market cycles rather than trying to time them.
Rebalance regularly to take advantage of volatility.
Focus on process and time horizon, not day-to-day headlines.
This year’s wars, inflation concerns, and political uncertainty are reminders that markets are constantly facing challenges. Yet through it all, they have again shown resilience. Volatility is not a flaw in investing; it is a feature, and over time, it is part of how wealth grows.
Final Thoughts
Market concentration, new highs, geopolitical uncertainty – none of these are new challenges. Each generation of investors faces them, just with different names and faces. The consistent lesson is this: trying to outguess the market’s next move usually backfires.
The antidote is timeless: build resilient, diversified portfolios, stay patient, and let time do the heavy lifting.
And in case you were wondering: the only company from the S&P 500’s top ten in 2000 that is still there today is Microsoft. A reminder that while corporate leaders change, the market’s natural selection process continues, and investors who stay diversified do not have to guess which companies will endure.
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Monthly Changes in Indices
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Monthly Performance By Sector
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Interest Rates: The Federal Open Market Committee (FOMC) announced that it is holding interest rates steady in its July meeting, where they have been since December 2024.
Inflation: The Consumer Price Index (CPI) increased 0.2% month-over-month in July, after rising 0.3% in June. Over the last twelve months, CPI increased 2.7%. Core CPI (which excludes food and energy) increased 0.3% in July compared to June and rose 3.1% compared to a year ago.
Housing: According to the National Association of Realtors, existing home sales decreased 2.7% month-over-month in June and had no change in sales from one year ago. The median existing-home sales price rose 2% from June 2024 to $435,300 – the 24th consecutive month of year-over-year price increases. Sales of new single-family houses increased 0.6% in June from May and fell 6.6% from June 2024. The median sales price of new houses sold in June was $401,800 – a 2.9% decrease from a year ago.
Mortgage Rates: As of August 14th, 2025, the weekly average for a 30-year fixed-rate mortgage is 6.58%, slightly below the 52-week average of 6.68% and up 0.09% from a year ago.
Employment: According to the Bureau of Labor Statistics' Employment Situation Summary, unemployment was little changed in June at 4.2%. Job gains occurred in health care and social assistance.
Consumer Sentiment: The University of Michigan's Surveys of Consumers fell back 5% in August, declining for the first time in four months. Compared to its reading from one year prior, consumer sentiment is down 13.7%. Year-ahead inflation expectations rose from 4.5% in July to 4.9% in August. Long-run inflation expectations also increased from 3.4% in July to 3.9% in August. This ended two consecutive months of decreasing short-run inflation expectations and three months of decreasing long-run expectations.
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About the Author
Holzberg Wealth Management is a family-owned and operated financial planning and investment management firm based in Marin County, CA. As your financial advisors, we serve you as a fiduciary and are fee-only, so we never receive commissions of any kind. We help individuals and families like you in the greater San Francisco Bay Area and nationwide with the financial decision-making process to organize, grow, and protect your assets.
** This writing is for informational purposes only. The author and Holzberg Wealth Management do not guarantee or otherwise promise any results that may be obtained from using this report. No reader should make any investment decision without first consulting their financial advisor and conducting their own research and due diligence. These commentaries, analyses, opinions, and recommendations represent the personal and subjective views of the author and do not constitute a recommendation, offer, or solicitation to make any securities transaction. The information provided in this report is obtained from sources that the author believes to be reliable. External links to third parties are being provided for informational purposes only. Holzberg Wealth Management is not affiliated with the third-party websites linked to, unless otherwise explicitly stated, and does not constitute an endorsement or approval by Holzberg Wealth Management of any of the third party’s products, services, or opinions. Past performance is not a guarantee of future results. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Any charts and graphs provided are hypothetical and for illustrative purposes only, are not indicative of any investment, and assume reinvestment of income and no transaction costs or taxes.
