Narrow market

2024 has witnessed the narrowest market in U.S. equities since the Tech Bubble. Over the past 50 years, an average of 48% of stocks outperformed the S&P 500, but in the last two years, this figure has dropped below 30%, driven primarily by the dominance of U.S. Big Tech. This is not just a challenge for active managers who were underweight in these names—many of whom risked their careers by underperforming the index—but it also makes the current equity rally increasingly fragile. Monday’s events surrounding DeepSeek and the subsequent selloff in NVIDIA, while seemingly exaggerated, underscore this market vulnerability. As we near the end of January, US sector performance paints an interesting picture: healthcare has been the strongest performer this month, while tech has posted negative returns. At ECP, we focus on identifying quality companies across diverse industries that, in our view, trade at reasonable valuations. We remain convinced that humility—without getting swept up in market hype—is essential to achieving long-term success for our investors.