I have been an S&P 500 index investor for the past 25 years, and have ridden through the ups and downs of that timeframe with the belief I was invested in a broad base of economic activity.
In recent years, I’ve noticed the obvious consolidation of gains in a decreasing number of top firms in the index, and I assume that this has been an acceleration of a trend that has long existed. The AI run-up only further highlights this trend.
And yet for decades now we’ve thought of the top 500 firms as a broad base. But whenever I see a fixed number (500) in a dynamic scenario, I see constraint.
Is there any research I can read about what is considered a broad base now? Is there an index that isn’t the top X00 but rather the top x% of total market value? Is there a better index now (400? 600?)