A Market Cap Concentration Caution Flag Part II

Introduction: The Nifty Five Revisited
The Law of Large Numbers
Capitalizing on the Kailash Rankings when The Nifty Five are Running Rich
Fundamentals Today vs. Historical Periods of Nifty Five Market Cap Above +1 Sigma
The Nifty Five: Kailash Can Help Under Most Circumstances
An Inconvenient Truth
Conclusion: Humility over Hubris

Introduction: The Nifty Five Revisited

In our prior paper “A Market Cap Concentration Caution Flag?” we noted that since 2015, the market has experienced a dramatic increase in concentration among the 5 largest stocks. We dubbed these firms “The Nifty Five”and noted that the only precedent for such narrow index concentration could be found in the run-up and collapse of the internet bubble. In Fig. 1 below we have merely republished the basic chart from our original paper as a reminder to readers of just how thin the “air” has become for the market’s 5 largest firms.

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ADDITIONAL READING

The topics discussed in this article are aimed at seasoned professionals, as such, we have included some extra reading for anyone seeking out more information related to the topics above.

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Disclaimer

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