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It’s now a stock picker’s market as more shares outperform the S&P 500. Here’s what that means for your portfolio. - MarketWatch

1. Over 49% of S&P 500 stocks surpassed index gains; active managers find new opportunities. 2. Equal‐weight S&P 500 historically outperforms after concentration declines; smaller stocks gain momentum. 3. Rising dispersion and volatility signal shifting performance dynamics and reduced megacap dominance. 4. Investors increasingly favor active stock picking and cheaper ETFs amid market uncertainties.

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FAQ

Why Neutral?

While broader participation and dispersion suggest structural shifts, historical trends show such changes do not drive immediate S&P 500 price moves. For example, previous dispersion periods post-1998-1999 did not drastically alter the index’s trajectory.

How important is it?

The article highlights a notable shift in dispersion within the S&P 500 influencing active management and index construction, though its immediate price impact is moderate. Historical patterns and evolving market dynamics substantiate a structural change warranting attention.

Why Long Term?

The sustained shift in performance dispersion and reduced megacap reliance indicate a structural, long-term change, reminiscent of past cycles following concentration thresholds.

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