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Even the old Macedonians knew population collapse was one of the biggest risks of an empire. Alexander would regularly send his young male troops back home from his 13 year conquest to start and expand their families.

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Stock market concentration may be justified when market cap reflects true value creation. Economic profit, calculated as (ROIC - WACC) × Invested Capital, is a key metric. Top 10 stocks often mirror this, capturing significant economic profit.

From 1990-2023, the top 10 stocks averaged 17% of market cap but 46% of economic profit. By 2023, they reached 27% of market cap and 69% of economic profit. Market cap concentration reflects value creation prospects.

The top 10 U.S. companies by market cap in 2023 contributed $331B in economic profit, out of a $481B total for public companies.

Historical data (1950-2023) shows the top stock underperformed the S&P 500 with an average return of -1.9%. However, the second and third largest stocks did better, with average returns of 2.6% and 1.6%, respectively.

Market concentration can raise concerns about reduced diversification, overvaluation, and the impact of index fund flows. Despite risks, a few companies consistently drive value, with only 11 stocks spending more than two years in the top 3 since 1950.

Since 1950, only 11 stocks have remained in the top 3 by market cap for more than two years. Nine of these are among the greatest wealth creators in the U.S. stock market since 1926, highlighting the rarity and significance of enduring market leadership.

Just bought @levelsio's book on how to build startups the indie way. Pieter is an incredibly inspiring guy who provides great insights and builds everything out in the open. Can't wait to delve into his self proclaimed "brain dump" and share interesting takes!