The content argues that current investment strategies, particularly relying on market-cap-weighted index funds, carry extreme concentration risk in a few mega-cap tech companies, mirroring historical financial bubbles and setting investors up for potential catastrophic losses. It advocates for a proactive, diversified approach to wealth preservation and growth.
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There was a guy in 1770 who figured out
he could print money and nobody stopped
him until he destroyed an entire
country's economy. His name was John Law
and he convinced France to let him run
their national bank. Within 2 years, he
had created so much fake wealth that
people were literally trampling each
other in the streets to buy shares in a
company that owned nothing but swamp
land in Louisiana. Then it all collapsed
and France didn't recover for decades.
I'm telling you this because the same
pattern is happening right now. Except
this time, it's not one guy in a
powdered wig. It's your retirement
account. My name is Tom and I spend way
too much time thinking about how most
people are sleepwalking into financial
disasters they could easily avoid. If
you're someone who feels like
traditional investing advice sounds
great in theory, but never seems to work
when you actually need it to, subscribe
and like this video. It will help more
than you think. By the end of this
video, you'll understand the exact
concentration mechanism that every major
brokerage uses to funnel your money into
the same seven companies and why that's
setting you up for a crash that could
wipe out 20 years of savings in 18
months. I'm going to show you what I'd
actually do if I were starting from
scratch in 2026, knowing what I know now
about how markets really work versus how
they're sold to you. So, let's go back
to John Law in 1720. Here's what
happened. France was broke after too
many wars and they had this massive debt
problem. John Law shows up and says,
"Hey, I've got a solution. Let me start
a bank that issues paper money backed by
future profits from French territories
in America." The French government,
desperate for cash, agrees. Law creates
the Mississippi Company, which
supposedly owns all this valuable land
in Louisiana. He starts issuing shares.
People buy them because paper money is
easier than gold. And everyone's getting
rich on paper. The share price goes from
500 levers to 18,000 levers in less than
two years. Everyone in Paris is selling
their property, their jewelry,
everything to buy more shares. They're
camping outside Law's house trying to
get in on the next offering. But here's
the catch. The Louisiana territory was
basically worthless swamp land. There
was no gold, no profitable trade,
nothing generating actual revenue. Law
was just printing money and using new
investments to pay returns to earlier
investors. Classic scheme, right? But it
gets worse. Law knew it was
unsustainable. So he started printing
even more money to buy up the debt
himself, inflating the currency while
inflating the stock. The French
government loved it because their debt
was disappearing. So they gave him more
power. Then in 1720, people started
asking questions. They wanted to convert
their paper shares back to gold. Law
didn't have the gold. The bank couldn't
honor the conversions. Within 6 months,
the shares crashed from 18,000 LRA to
500, then to zero. People who had been
millionaires on paper were bankrupt. The
French economy collapsed so hard that
they banned paper money for decades. Law
fled the country and died. broke in
Venice nine years later. Here's who won.
The French government had unloaded a ton
of debt onto private investors who were
left holding worthless paper. A handful
of insiders who got out early walked
away wealthy. Here's who lost.
Basically, everyone else in France.
Middle-class families, small business
owners, people who believed the system
would protect them. And here's the
kicker. The bankers and government
officials who enabled law faced almost
zero consequences. They just moved on to
the next scheme. So what does this have
to do with investing in 2026?
Everything. Because right now you're
being sold the same concentrated bet
except instead of Louisiana swampland,
it's seven tech companies. Imagine
you're building a house and the
contractor says, "We're going to use the
best materials." Sounds great, right?
Then you find out that 70% of your
entire house, the foundation, the walls,
the roof, all of it is supported by
seven wooden beams. Those beams are
really strong right now. Strongest beams
on the market. But you're thinking,
"What happens if three of those beams
crack?" The contractor says, "Don't
worry. These beams have been getting
stronger every year for 15 years. Would
you live in that house? Would you raise
your kids there? because that's exactly
what your index fund is. As of early
2026, the S&P 500 index, the thing every
financial adviser tells you to buy and
hold forever, has more than 30% of its
total value concentrated in seven
companies. Apple, Microsoft, Nvidia,
Amazon, Alphabet, Meta, Tesla. Seven
companies out of 500. That's 1.4% 4% of
the companies holding nearly a third of
the weight. Back in the '90s, the top
seven companies made up maybe 15%. We've
doubled the concentration in 25 years,
and everyone's acting like this is
normal. Now, you might be thinking,
"Okay, but those companies are massive
and profitable. They print money."
That's true, but so did the Nifty50. Let
me tell you about the Nifty50 in the
early '7s. These were the 50 stocks that
every institutional investor said you
could buy and never sell. Blue chip
American companies like Polaroid, Xerox,
Kodak, Avon, Sears. The idea was that
these companies were so dominant, so
well-managed, so essential to American
life that you didn't even need to look
at the price, just buy and hold forever.
Growth was guaranteed. These stocks were
trading at price to earnings ratios of
50, 60, even 80 times earnings, which is
insane. But people said it didn't matter
because growth would catch up. Then 1973
happened. Oil crisis. Inflation spiked.
Recession hit. Suddenly, growth stocks
weren't growing. The Nifty50 crashed.
Polaroid fell 91% from peak to trough.
Avon fell 86%. Xerox fell 71%. These
weren't speculative startups. These were
the safest companies in America. And if
you bought at the peak in 1972, it took
you 25 years just to break even on some
of them, not counting inflation. A
quarter century of zero returns on the
safest investments. Here's what happened
step by step. First, institutional
investors decided that a small group of
stocks were so good that valuation
didn't matter. Second, they poured money
into those stocks, driving prices higher
and higher. Third, the high prices
became evidence of quality, creating a
feedback loop. Fourth, when economic
conditions changed, those overvalued
stocks had the furthest to fall. And
fifth, the diversification everyone
thought they had disappeared because all
the safe stocks crashed together. But
here's the part nobody talks about. Who
made money? The executives at those
companies who sold stock at the peak.
The investment banks who underwrote the
offerings and collected fees. The early
investors who got in at reasonable
prices and got out before the crash. Who
lost? Regular people who bought at the
top because their financial adviser said
it was safe. Pension funds that needed
steady returns. Retirees who thought
they were being conservative. And the
most surprising twist, the financial
industry learned nothing. They just
waited 20 years and did it again with
tech stocks in the late 90s, then again
with housing in 2007, and now again with
megaap tech in 2026.
So what does this pattern look like
today? Let's talk about Nvidia.
Incredible company, genuinely
revolutionary technology. I'm not saying
they're bad, but in 2023, Nvidia was
worth around $300 billion. By early
2026, they crossed $3 trillion. That's a
10 times increase in under three years.
Their revenue grew, sure, but not 10
times. What grew 10 times was the
multiple investors were willing to pay.
The same thing that happened with
Polaroid in 72. Now, you're asking
yourself, is Nvidia overvalued? Maybe,
maybe not. That's not even the point.
The point is that your index fund is now
massively dependent on Nvidia staying at
that valuation or going higher. If
Nvidia drops 50%, which is not some
crazy scenario given it's happened to
every high-flying tech stock eventually,
that alone takes almost 5% off the S&P
500. Add in similar drops for Apple,
Microsoft, and a couple others, and
you're down 20 to 30% even if the other
493 companies do fine. This is where it
gets really interesting. The system is
designed to hide this risk from you.
Here's how. First, they call it
diversification. You own an index fund
with 500 companies. That sounds
diversified. But if seven of those
companies are a third of your money,
you're not diversified. You're
concentrated. It's a linguistic trick.
Second, they use market cap waiting.
Sounds technical and smart, right? All
it means is that the stocks that have
already gone up the most get the biggest
share of new money. You're automatically
buying more of what's expensive and less
of what's cheap. It's the opposite of
what every successful investor actually
does. Third, they show you long-term
charts that smooth out the crashes.
Yeah, the market always recovers
eventually, but eventually might be 25
years, and you might not have 25 years.
Let me give you the emotional reframe
you need. You are not a passenger in
this system. You are the product. The
financial industry makes money from fees
and volume, not from your returns. When
they say buy and hold index funds, what
they mean is give us your money and
don't ask questions for 30 years while
we collect our percentage regardless of
what happens. I'm not saying index funds
are evil. I'm saying blind index
investing in 2026 is playing a game
where the rules are rigged against you.
So, if I were starting fresh right now,
knowing what I know, here's exactly what
I'd do. Not what sounds good in theory,
not what worked in 2010, but what
actually makes sense given the current
concentration risk and market structure.
Action step one, I check my actual
exposure right now. not what I think I'm
exposed to, what I'm actually exposed
to. If you own an SNP 500 index fund or
a total market fund, go look up the top
10 holdings. Add up the percentages. If
it's more than 25% in the top 10, you're
concentrated, not diversified. Most
people have never done this. They just
assume index fund equals safe. Go look
tonight. Vanguard, Fidelity, Schwab,
whoever you use, they publish the
holdings. Five minutes, do it. Action.
Step two, I'd implement what I call the
inverse concentration strategy. Here's
how it works. Instead of letting market
cap waiting automatically put 30% of my
money into seven stocks, I'd manually
create a position that does the
opposite. You can buy equal weight index
funds where all 500 companies get the
same allocation regardless of size. Or
you can buy international developed
markets which are trading at 15-year low
valuations compared to US stocks. Or you
can buy small and midcap value stocks
which have historically outperformed
large cap growth over 20-year periods
but have been left behind for the last
decade. I'm not saying sell everything
and go allin on small caps. I'm saying
if the market is automatically
concentrating your risk in seven
companies, you need to manually
rebalance that risk somewhere else. If
30% of a standard index is in mega cap
tech, maybe 30% of your portfolio goes
into things that are negatively
correlated or at least uncorrelated.
emerging markets, commodities, real
estate investment trusts that actually
own physical property, treasury
inflation protected securities if you're
worried about inflation coming back.
Here's the math on why this matters.
Let's say you have $500,000 in a
standard SNP500 fund. About 150,000 of
that is in the big seven tech stocks. If
those stocks drop 50% over the next two
years, which happened to the Nifty50 and
happened to tech stocks in 2000 to 2002,
you just lost $75,000 from that
concentration alone.
The other 350,000 might stay flat or
drop less, but you're still down 15%
overall just from seven stocks. Now,
imagine you had rebalance 6 months ago.
you moved 75,000 of that 150,000 into
equal weight or international or small
cap value. Those alternatives might also
drop, but they won't drop 50% because
they're not as overvalued. Maybe they
drop 20%. Now you've lost 15,000 instead
of 75,000.
That's $60,000 of protection just from
recognizing the concentration risk. But
now you might be thinking, what if those
seven stocks keep going up? What if
Nvidia hits 5 trillion and I miss out?
Here's the thing. You have to decide
what you're optimizing for. Are you
trying to maximize your upside if the
current trend continues forever? Or are
you trying to build actual wealth that
survives different market conditions?
Because nobody, and I mean nobody, can
tell you when the music stops. John
Law's Mississippi Company looked like a
sure thing until it didn't. The Nifty50
looked unstoppable until they stopped.
Housing prices only go up until they go
down. I'd rather make 70% of the gains
in a bull market and avoid 70% of the
losses in a bare market than swing for
the fences and risk losing everything.
That's not being scared, that's being
smart. The people who got rich and
stayed rich are the ones who didn't blow
up. Action step three, I'd set up what I
call valuation trip wires. These are
automatic rules that force me to
rebalance when things get crazy because
in the moment you won't want to. In
1999, people who sold tech stocks looked
stupid for 2 years. Then they looked
like geniuses. You need rules that
remove emotion. Here's an example rule.
If any single stock in my portfolio
becomes more than 8% of my total account
value, I automatically sell enough to
bring it back to 8%. If the SNP500 price
to earnings ratio goes above 30, I
automatically move 10% of my stock
allocation into bonds or cash. If the
top 10 holdings in my index fund exceed
30% of the total, I rebalance into equal
weight. These aren't market timing.
These are valuation discipline. You're
not trying to predict crashes. You're
limiting your exposure to expensive
assets and rebalancing into cheaper
ones. This is what every successful
endowment in sovereign wealth fund does,
but retail investors are told to just
buy and never sell. Action step four,
and this is the one nobody talks about.
I'd build an income floor outside the
market. This is psychological as much as
financial. The reason people panic sell
at the bottom is because they need the
money and the market is crashing and
they have no other option. If you have
12 months of expenses in a high yield
savings account earning 4 to 5%. And you
have some dividend paying stocks or
bonds throwing off even a small amount
of income, you can survive a market
crash without selling at the bottom. You
can wait it out. You can even buy more
when things are cheap. Here's the math.
If you spend $60,000 a year, you need
60,000 in accessible cash or
equivalents. Yeah, that's money that's
not compounding the market, but it's
insurance that lets you stay in the
market when everyone else is forced out.
During 2008, people with cash bought
stocks at 50% off. People without cash
sold at 50% off to pay their mortgage.
Same event, opposite outcomes, entirely
based on having a buffer. I'd also look
hard at building income streams that
aren't tied to my portfolio value. This
could be a side business, rental income
from real estate, royalties from
something you create, even a part-time
consulting gig in your field. The goal
is that if the market cuts your
portfolio in half, your life doesn't
fall apart. You're not desperate.
Desperation makes you sell low and buy
high, which is how wealth gets
transferred from regular people to
institutions. Action step five. I'd get
really honest about time horizon. The
advice to buy and hold for 30 years is
great if you're 25. If you're 45 and
planning to retire at 60, you don't have
30 years to recover from a crash. You
have 15 years. And if a major crash
happens in year 10, you're screwed. The
sequence of returns matters as much as
the average return. Two people can get
the same average annual return over 20
years. But if one person has a crash
right before retirement and the other
has it early in their career, the first
person runs out of money and the second
person is fine. If you're within 10
years of needing the money, whether
that's retirement or buying a house or
funding a kid's college, you cannot
afford to have 30% of your portfolio in
seven stocks that are priced for
perfection. You need to derisk, even if
it means lower returns. Because losing
25% when you're 55 is not the same as
losing 25% when you're 30. At 30, you
have time and income to recover. At 55,
that loss might be permanent. So, here's
the bigger picture. The financial
industry has spent 40 years convincing
you that investing is complicated and
you need experts and then the experts
tell you to buy index funds and do
nothing, which is the least complicated
strategy possible. Why? Because it's
profitable for them and easy to scale.
They're not wrong that index funds are
better than picking individual stocks
for most people, but they're lying by
omission when they act like all index
funds are the same and concentration
risk doesn't exist. Just like John Law
convinced France that paper money backed
by nothing was the same as gold, the
financial industry has convinced you
that an index fund with 30% in seven
stocks is the same as diversification.
It's not. It's a concentrated bet on the
continued dominance of a handful of
companies that are trading at valuations
that have historically preceded major
crashes. Now, am I saying those seven
companies are going to crash tomorrow?
No, I have no idea. And neither does
anyone else. Microsoft might be worth 10
trillion in 5 years or might be worth 1
trillion. What I'm saying is that if
you're not aware of the concentration,
if you're not actively managing that
risk, you're making the same mistake
that people made with the Mississippi
company and the Nifty50 and do stocks
and housing. You're assuming that what's
worked recently will work forever, and
you're ignoring the structure of the bet
you're actually making. Let me tell you
what the smart money is doing. And by
smart money, I don't mean hedge funds
doing crazy derivatives. I mean
endowments and foundations that need to
generate returns for decades without
blowing up. Yale's endowment, often
considered one of the best managed pools
of money in the world, has less than 10%
in US stocks. 10%. The rest is in
private equity, real assets, foreign
markets, absolute return strategies,
things that don't move in lock step with
the SNP 500. They're not trying to beat
the index every single year. They're
trying to compound wealth across
different economic environments without
catastrophic losses. You can't replicate
Yale's endowment as a regular person.
You don't have access to the same
investments, but you can replicate the
philosophy. Diversify across asset
classes that don't all crash together.
Don't let any single bet, whether it's a
company or a sector or a country, become
too big. Rebalance from expensive to
cheap. Build income sources outside your
portfolio. Boring, I know, but boring is
what survives. Here's what I'd avoid in
2026. I'd avoid anything that's sold as
you can't lose or guaranteed returns or
safe as the market. If it sounds too
good to be true, it is. I'd avoid trying
to time the market by going to cash and
waiting for a crash because you'll miss
years of gains and probably get back in
at the wrong time anyway. I'd avoid
complex products I don't understand,
leverage ETFs, inverse funds, option
strategies sold by gurus on YouTube. If
you can't explain how it makes money to
a 12-year-old, don't put your savings in
it. And I'd avoid the temptation to do
nothing just because doing something
feels overwhelming. Doing nothing right
now when concentration is at historic
highs is an active choice to accept that
risk. It's not neutral. You're not being
patient. You're being passive and
there's a difference. Let's talk about
the psychological shift that needs to
happen. Most people treat their
portfolio like a plant. Water it with
regular contributions, leave it in the
sun, check on it once a year, hope it
grows. That worked great from 1980 to
2000 and from 2009 to 2021 when we had
multi-deade tailwinds of falling
interest rates and expanding valuations.
But those tailwinds are over. Interest
rates are higher and unlikely to go back
to zero. Valuations are already at the
top end of historical ranges. You can't
just plant your money and forget it
anymore. You have to treat your
portfolio like a garden. You still plant
and water, but you also weed, you prune,
you rotate crops, you adapt to the
seasons. That doesn't mean daily trading
or obsessing over every headline. It
means quarterly check-ins where you look
at valuation, rebalance what's gotten
too big, trim what's expensive, add to
what's cheap. It's active management in
the sense of being engaged, not active
trading in the sense of constant buying
and selling. The reason this matters
emotionally is that when the next crash
comes, and it will come because crashes
always come, you need to know that you
did something. If you just bought a
standard index fund and hoped, you're
going to feel like a victim when it
drops 30 or 40%. You'll panic. You'll
sell at the bottom. You'll swear off
stocks forever. But if you've already
taken steps to reduce concentration, to
build an income floor, to diversify
across assets, you'll feel like you
prepared. You won't be happy about the
losses, but you won't be destroyed.
You'll be able to hold on or even buy
more. And that's the difference between
people who build wealth through cycles
and people who get wrecked. Here's a
scenario to make it concrete. It's late
2027. There's been some kind of shock.
Doesn't matter what recession,
geopolitical crisis, tech regulation,
whatever. The mega cap tech stocks drop
40% in 6 months. The SNP 500 drops 28%
overall. Your coworker who has
everything in a standard index fund and
needed to retire in 2028 now has to work
three more years because his portfolio
went from $900,000 to $650,000.
He's angry. He's scared. He sells half
of what's left and puts it in cash,
locking in the losses. The market
recovers over the next 3 years, but he
missed most of it because he was in
cash. You on the other hand rebalanced a
year earlier. You move some money into
equal weight, some into international,
some into bonds. You kept a cash buffer.
Your portfolio drops 20% instead of 28%.
Not fun, but you knew it could happen.
You don't need the money for five more
years and you have a year of expenses in
cash, so you don't have to sell.
Actually, you take some of that cash and
buy stocks at lower prices. 3 years
later when things recover, your
portfolio is higher than it was before
the crash. Same market, different
outcome because you prepared. That's
what I mean by taking control. You can't
control what the market does, but you
can control your exposure, your
liquidity, your emotional resilience.
Most people give up all three because
they're told that investing is either
too complicated for them or so simple
that they shouldn't think about it. Both
are lies designed to keep you passive.
Let me give you one more historical
example to drive this home. In 1989,
Japan's stock market was the largest in
the world. The NIK index hit 38,915.
Japanese companies were buying up
American real estate. Everyone said
Japan would overtake the US
economically. And Japanese stocks traded
at 60 times earnings because growth was
inevitable. If you were a Japanese
investor in 1989 and you listened to the
experts who said just buy the index and
hold, you would have lost 75% over the
next 3 years. The NIK bottomed around
7,000 in 2003.
As of 2026, 37 years later, it only
recently got back to the 1989 peak. 37
years of zero real returns. Now, Japan
had specific structural problems, demographics,
demographics,
debt, zombified banks, but the point is
that the market always comes back. Is
only true if you're talking about the
global market over a century. Specific
markets can stay down for decades. And
even in the US, which has been the best
performing market in the world, there
have been stretches where stocks went
nowhere. 1966 to 1982 basically flat
after inflation. 2000 to 2012 flat. If
you retired at the wrong time, you were
in trouble. So the lesson is not don't
invest in stocks. It's don't assume that
what worked for the last 15 years will
work for the next 15. The US market has
been the best performing in the world.
Mega cap tech has been the best
performing sector. passive indexing has
been the best performing strategy. All
of those could reverse and if they do,
the people who were 100% in a cap
weighted US index fund will suffer the
most. What would I actually buy in 2026
if I were building a portfolio from
scratch? Here's the mix I'd start with,
and I want to be clear, this is not
financial advice. This is what I'd do
for myself, knowing my risk tolerance
and time horizon. 30% in a diversified
US stock fund that's equal weight or
tilted towards small and midcap value,
20% in international developed markets,
Europe, Japan, Australia, places that
are cheaper than the US right now, 10%
in emerging markets for long-term growth
exposure. 15% in real assets. This could
be REITs, commodities, infrastructure
funds, things that do well when
inflation picks up. 15% in bonds, a mix
of treasuries for safety, and corporate
bonds for yield, 10% in cash or
short-term equivalents, your emergency
fund and opportunity fund. That's 100%.
And notice that none of it is in a
standard cap weighted SNP500 fund. I'm
not opposed to those funds, but in 2026,
given the concentration risk, I'd rather
build diversification manually. This mix
gives you exposure to stocks for growth,
international for diversification, real
assets for inflation protection, bonds
for stability, and cash for flexibility.
No single position dominates. If tech
crashes, you're not destroyed. If
inflation spikes, you have some
protection. If interest rates rise, your
bonds might suffer, but your cash can be
redeployed. You're not trying to predict
the future. You're trying to survive
different versions of it. Would this
portfolio beat the S&P 500 if the
current concentration trend continues
and those seven stocks double again? No,
it wouldn't. You'd underperform. And
that's okay. Because if the
concentration reverses and those seven
stocks crash, you'd outperform by a huge
margin. You're trading maximum upside
for lower downside. And at a certain
point in your wealth building journey,
that's the right trade. When you're
trying to get your first $100,000,
sure, take more risk. When you're trying
to protect 500,000 or a million, not
losing it becomes more important than
doubling it. Here's the final
psychological shift. Wealth is not built
by hitting home runs. It's built by not
striking out. If you can generate decent
returns, 7 to 9% a year, and avoid
catastrophic losses, you'll end up in
the top 10% of investors over 30 years.
The people who chase 15% returns are the
same people who blow up when they hit a
bad stretch. Slow and steady actually
wins, but only if you're steady through
the rough patches, and you can only be
steady if you've prepared. So, if I
wanted to invest in 2026, I'd start by
admitting that the environment is
different than it was in 2010 or even
2020. Valuations are high, concentration
is extreme, the easy gains from falling
rates are over. I'd check my actual
exposure and fix any concentration risk.
I'd build a cash buffer so I'm never
forced to sell at the bottom. I'd
diversify across assets and geographies,
not just companies. I'd set up rules to
rebalance automatically so I don't have
to rely on willpower. And I'd accept
that I might underperform in the short
run if the current trends continue. But
I'd sleep better knowing I'm not betting
everything on seven companies staying
expensive forever. That's it. Not
complicated, not sexy, not going to make
me a millionaire in 12 months. But it's
real. It's based on how markets actually
work. And it's designed to survive
different outcomes instead of relying on
one specific thing to keep happening.
Most people won't do this because it
requires effort and it means admitting
that the default option might not be the
best option. But if you're still
watching, you're not most people. You're
someone who actually wants to understand
this stuff and make smart decisions, not
just follow the crowd off a cliff. So go
check your portfolio tonight. Look at
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Введите ссылку на любое YouTube-видео, чтобы получить полную транскрипцию
Форма извлечения транскрипции
Большинство транскрипций готово менее чем за 5 секунд
Установите расширение для Chrome
Получайте транскрипции прямо на YouTube, не переходя на другие сайты. Установите наше расширение и открывайте текст любого видео в один клик — прямо на странице просмотра.
