The mighty 10

The concentration in US equity markets isn’t just a matter of sentiment — it reflects a stark earnings reality.

As Andrew Lapthorne from SG Research illustrates in this compelling chart, the only segment of the S&P 500 seeing meaningful profit growth is its top 10 stocks. Strip those out, and forward net income has been essentially flat since mid-2021. By looking at absolute profit forecasts the analysis makes clear that we are far from a broad-based recovery in earnings.

This reminds us of the Nifty 50 era in the 1960s, when a handful of high-growth companies stood out against a weak broader market. Their dominance wasn’t just about popularity — it was grounded in superior fundamentals.

At ECP, we take this as a cue to focus not on benchmarks or headlines, but on the true earning power of individual businesses. One recent example: we used the temporary weakness in NVIDIA at the beginning of Q2 to add to our position in our global portfolios — a decision based on fundamentals, not crowded index weight.