Active portfolio managers face significant challenges in outperforming the S&P 500, with simulations showing only three out of 1,000 portfolios achieving this from July 2023 to June 2024. The dominance of a few megacap stocks like Nvidia, Apple, and Microsoft has led to concentrated risks, making diversification increasingly elusive. While historical data suggests a cyclical nature to market performance, the current environment favors cap-weighted indexes, raising questions about the sustainability of this trend.
