Are US Stocks Inflated? Fund Managers Say So
That doesn't mean that they're exiting equities, Bank of America found in its August Global Fund Manager Survey. Cash allocations are at a low 3.9% of assets under management, and equity allocations are trending upward. On average, fund managers are 14% overweight on global equities, according to the report, and advisors told ETF Upside that the findings are hardly an indictment of the US stock market in its entirety.
'If history has taught investors anything, it's that 'the market' is rarely the monolith we make it out to be,' said Patrick Huey, owner of Victory Independent Planning.
READ ALSO: Should Asset Managers Trust Future BLS Data? and The Future of AI ETFs May Be Data Centers
Did I Break Your Concentration?
A culprit behind the overvaluation is the Magnificent Seven, whose members make up only a fraction of publicly traded companies but have outsized market caps. Market cap weighting, consequently, is skewing averages higher, and big tech firms may represent less of a value than, as Huey said, 'more reasonably priced' public companies. 'Those tech titans now make up nearly 30% of the S&P 500's market capitalization,' he said. Another advisor, Thomas Rindahl, of TruWest Wealth Management Services, noted that 'cap weighting of indices can lead to a disproportionate influence and dependence upon the performance of a few companies, which ultimately leads to market vulnerability, if not bubbles.' Of course, this story is not entirely new, and there has been more attention to equal-weight or capped-weight index ETFs recently.
Invest in Gold
American Hartford Gold: #1 Precious Metals Dealer in the Nation
Priority Gold: Up to $15k in Free Silver + Zero Account Fees on Qualifying Purchase
Thor Metals Group: Best Overall Gold IRA
A couple of those ETFs show the categories' benefits and limitations:
The iShares S&P 500 3% Capped ETF (TOPC), which launched earlier this year, gives an alternative to the top-heavy index, though its top holdings are still the same big names — Nvidia, Apple, Microsoft, etc. — that are at the top of market-cap weighted funds.
The Invesco S&P 500 Equal Weight ETF (RSP) has the benefit of diversification, giving the same weight to every stock, but it has relatively high turnover and volatility, according to a Morningstar analysis.
What, Me Worry? Concentration risk is a cause of anxiety among clients, but so are things like algorithmic trading and the political environment's effect on portfolios, Huey said. 'Beneath it all is the timeless fear of the unknown. Our response is grounded in time-tested principles: Diversify beyond the headline-makers. Stick to a long-term plan.'
This post first appeared on The Daily Upside. To receive exclusive news and analysis of the rapidly evolving ETF landscape, built for advisors and capital allocators, subscribe to our free ETF Upside newsletter.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
23 minutes ago
- Yahoo
America is barrelling toward a 'deflationary shock' as 3 forces hit consumer demand, a top economist says
There's a risk that inflation could turn negative soon, David Rosenberg says. The top economist thinks the US is headed for a "deflationary shock." Tariffs, immigration policies, and an aging population could hit consumer spending and growth, he said. Inflation-weary consumers would be forgiven for thinking falling prices are a good thing, but that's not necessarily the case. Disinflation is usually welcomed news, but deflation signals something more dire is going on in the economy. And deflation is exactly what may be in store for the US, according to one top economist. David Rosenberg, the president of Rosenberg Research, thinks that America could be headed toward a "deflationary shock," a situation where prices decline rather than merely increase at a slower pace. While consumers might perk up at the idea of lower prices, deflation is often thought to be a more difficult problem for policymakers to solve than high inflation. The Fed can raise interest rates to combat higher prices, but, in the case of deflation, central bankers can only lower interest rates until they hit 0% before needing to turn to other options to boost the economy. That's one reason why countries like Japan and China, which have been slammed with deflation crises in the past, have seen their economists mired in long periods of anemic growth in the years that followed. The US could be facing a similar fate, Rosenberg said, adding that he believed America was "following the footsteps" of those two nations in particular. "We are now staring down the barrel of a deflationary shock, and it amazes me how all the bond bears, inflation-phobes, and Fed policy hawks are missing this secular shift as they continue to play by the old rules," Rosenberg wrote in a report on Wednesday. He sees three reasons the US is headed for an era of deflation. Tariffs could actually be deflationary Tariffs are thought by economists to be inflationary, as companies can pass along the cost of import duties by raising prices for consumers. But there's also a deflationary aspect to tariffs: Higher prices cause consumers to spend less, which could lower prices as demand falls relative to supply, Rosenberg said. There are already signs that consumers are beginning to tighten their belts. While inflation rose to 2.7% in July, retail sales have been pretty weak, growing 0.6% in June after a 0.9% contraction in May, according to US Census Bureau data. July is expected to show retail sales grew 0.5%. "GDP is, after all, only about spending," Rosenberg said, referring to how consumer spending accounts for around two-thirds of GDP growth in the US. Trump's immigration crackdown could hit growth Slower spending among Americans could collide with the near-term impact of President Donald Trump's immigration policies. Reduced immigration is likely to result in less consumer spending, another factor that will lower prices and hurt economic growth, Rosenberg said. Immigration flows have already started to drop, with new entrance visas to the US plunging 20.5% in May, he said. Meanwhile, Rosenberg added that most immigrants in the US are between the ages of 35 and 54, the age range where spending tends to peak in a lifecycle. "In the final analysis, the demand destruction coming from the trade file, along with lower growth in future spending due to a reduced immigrant consumer base, should lead to lower inflation," he wrote. "Every young immigrant household not allowed into the US accelerates the aging consumption cliff that lies around the bend," Rosenberg added. An aging population will be a drag on spending Those factors are exacerbated by the fact that America's population is rapidly growing older, and people aren't having as many kids as they used to. According to the latest projections from the US Census, the number of Americans 65 and older is expected to soar to 82 million by 2050, up 47% from 2022 levels. An aging population can hit economic growth, given that older Americans tend to save more than they spend. The change in someone's likelihood to consume drops from 0.94 at age 35 to around 0.67 at age 65, per Rosenberg's analysis. "The fact that this is happening in such a highly leveraged economy is only going to exacerbate the deflationary trendline in the not-too-distant future," Rosenberg said, referring to high debt levels in the US that could limit the government's ability to spend on other things to stimulate the economy. Rosenberg, who's known as a contrarian on Wall Street, has made a lot of bearish calls about the US economy in recent years. Earlier in this year, he said he still believes the US was headed for a recession, and speculated that a downturn could materialize as soon as mid-summer. Read the original article on Business Insider
Yahoo
23 minutes ago
- Yahoo
Stock market today: Dow, S&P 500, Nasdaq futures waver as investors await retail data after rate-cut bets cool
US stock futures traded mixed as Wall Street tempered its rate-cut hopes and awaited July's retail sales report. Futures attached to the Dow Jones Industrial Average (YM=F) rose around 0.3%. Futures attached to the benchmark S&P 500 (ES=F) flatlined. Futures attached to the tech-heavy Nasdaq 100 (NQ=F) fell about 0.2%. Stocks wobbled on Thursday, ending a two-day rally sparked by investor confidence that an interest rate cut in September was nearly certain. Doubts about a significant cut at the Fed's next policy meeting crept in after July's Producer Price Index (PPI) came in hotter than expected. After the bell, Intel (INTC) shares jumped on news that the US government is considering taking a stake in the company. Trump met with Intel's CEO on Monday after calling on him to resign the previous week. UnitedHealth (UNH) stock also soared after a regulatory filing showed Warren Buffett's Berkshire Hathaway bought 5 million shares in the company. Finally, Applied Materials (AMAT) dove after its earnings report included a downbeat forecast that spooked investors. On Friday, Wall Street will be watching the release of retail sales data. The results will offer clues as to whether Trump's tariffs are impacting consumer spending habits.
Fast Company
24 minutes ago
- Fast Company
Why the smartest creators are building studios
If the last 10 years were about creators building audiences, the next 10 will be about them building infrastructure. We're entering the era of the creator-led studio. It's already happening. Creators are turning themselves into multi-dimensional entertainment businesses. They're not just building content pipelines; they're building worlds, structuring teams, developing IP, launching products, and curating and hosting IRL experiences. They're weaving content, community, and commerce into something bigger with the mindset of founders and the ambition of studio executives. Creators are becoming studios Not in the traditional sense…not high rises, backlots, or broadcast slots, but in a way that's native to the internet and modern-day technologies: fast-moving, audience-first, built around trust and consistency. It's a shift from: 'I make content' → 'I build programming' 'I do brand deals' → 'I own the formats' 'I am the brand' → 'I build brands' The best creator-led studios aren't just launching formats, they're building systems for turning creative point of view (POV) into repeatable output. Moreover, the creators who scale aren't just building content engines; they're building emotional frameworks. Call it voice, POV, or DNA, it's what everything else ladders up to. And at the very bleeding edge, those doing it the best are expanding those frameworks beyond content into commerce, community, courses, products, and live experiences. They are building full-stack media businesses, looking to own the audience, the formats, and the infrastructure. What's driving it? 1. Creators are maturing into operators Creators who have the desire to go after this opportunity are no longer solo acts. They're founders. They're hiring. Building teams. Thinking in pipelines, product-market fit, and distribution economics. They're not chasing virality, they are building staying power, and it's working. I explored this previously, when I discussed the shift from creator to entrepreneur. Now, it's evolving again, from entrepreneur to studio builder. One important callout, though. This isn't for every creator and isn't to diminish the incredible value to come from remaining small and mighty. There will be a thriving segment of creators who stick to what they're doing. However, I believe that the biggest share of audience and money will be held in the relatively few who become studio builders 2. Trust is becoming the most valuable signal As AI floods platforms with synthetic content, trust becomes the premium. As Doug Shapiro put it: ' Trust is the new oil. ' Audiences won't just want content; they'll want curation, context, and a point of view. The creators who earn and sustain that trust won't just be personalities. They'll be institutions. 3. Audience expectations are shifting We're now in an era where consistency is currency. People want formats they can return to. They want creators they can rely on. They want editorial judgment, recurring presence, and recognizable rhythms. That's not just a creative instinct; it's reinforced by platform algorithms and audience psychology. Recurring formats increase watch time, retention, and subscriber loyalty. When content appears reliably and feels familiar, audiences are more likely to form habits around it. Creators who think in seasons, franchises, and formats won't just gain attention, they'll earn mindshare. 4. Metrics over meaning The traditional media and advertising worlds, in their obsession with hyperperformance, data precision, and efficiency, left behind something essential: emotional connection. In that creative and cultural vacuum, creators stepped in. Not with metrics, but with meaning. Creators are value driven. They're plugged into the nuances of pop culture. And they're intimately connected to their communities through access, respect, and trust. They didn't just inherit the audience. They earned it. Not just as content creators, but creative directors of a new era. Bringing the kind of relevance, emotion, and resonance that modern culture wants. We're still in the early stages of this movement. But this shift is real. The creator economy isn't just growing faster, it's growing up. Over the next few years, I believe we'll see more and more creators evolve from individual success stories into collective media companies. Studios. Networks. Brand ecosystems. Institutions in their own right. Because the future of media isn't just creator-led. It's creator-built.
