Скачать или смотреть Historic Valuation Gaps Are Pointing to a Major Market Shift

U.S. equity markets remain near highs—but beneath the surface, valuation extremes, historic concentration, and narrow participation may be setting the stage for a shift in leadership.

Portfolio Manager, Dan Lysik, CFA, examines why forward returns for large caps may be constrained and why small caps could be approaching an important inflection point.

Elevated Large-Cap Valuations
The S&P 500 ended 2025 at ~22x earnings vs. a 30-year average of ~17x, with cyclically adjusted valuations near prior extremes (1999–2000, 2021)—levels historically associated with muted 5-year forward returns.

Record Market Concentration
The top 10 stocks represent ~41% of the index (as of 12/31/25), while the average S&P 500 stock has lagged meaningfully—an unusually narrow market setup that has historically preceded broader participation.

Small Caps at a Potential Inflection
Small caps trade at historically wide discounts, sit in the lowest decile of 10-year relative performance, and are significantly under-owned—conditions that have often marked the beginning of extended outperformance cycles.

With improving liquidity, potential rate cuts, earnings re-acceleration, and supportive policy tailwinds, the backdrop may favor a rotation toward smaller companies and more active, selective positioning.

For investors, this discussion explores why the next market cycle could look very different from the last.

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For informational purposes only. Not investment advice.

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