I’ve long been a conservative investor: broad index funds, tilted to the US, balanced with bonds and some overseas exposure. But is US indexing still “conservative?”

Today, the top 10 companies make up nearly 40% of the S&P 500. Eight of them are tech:

Nvidia, Microsoft, Apple, Google, Amazon, Meta, Broadcom, Tesla → ~37%
Berkshire Hathaway (BH) and Walmart → ~3%

You could argue that BH is even tech – about 23% of its portfolio is Apple and Amazon.

This leaves the S&P bandwagon very top-heavy in tech, tied to the current AI hype-cycle. The AI value chain is clear: Nvidia and Broadcom make the chips. The cloud giants deploy them. The rest of the S&P consumes AI services in search of productivity gains.

But what happens when industrials don’t find as big (or fast) a gain from AI as promised? When say, BNSF, Georgia-Pacific, or Ford slows down spend, because trains are trains, trees are trees, and manufacturing still requires material? The top-heavy bandwagon starts to wobble.

Don’t get me wrong, I’m a believer in AI’s promise. (Despite the lack of “emdashes”, GPT helped me refine this post). But it seems the US market valuation is all riding on this one idea.

So the question: where do you look for real diversification and upside?