0:02 There was a guy in 1770 who figured out
0:05 he could print money and nobody stopped
0:06 him until he destroyed an entire
0:09 country's economy. His name was John Law
0:11 and he convinced France to let him run
0:14 their national bank. Within 2 years, he
0:16 had created so much fake wealth that
0:18 people were literally trampling each
0:20 other in the streets to buy shares in a
0:22 company that owned nothing but swamp
0:26 land in Louisiana. Then it all collapsed
0:29 and France didn't recover for decades.
0:31 I'm telling you this because the same
0:33 pattern is happening right now. Except
0:35 this time, it's not one guy in a
0:37 powdered wig. It's your retirement
0:40 account. My name is Tom and I spend way
0:42 too much time thinking about how most
0:44 people are sleepwalking into financial
0:47 disasters they could easily avoid. If
0:48 you're someone who feels like
0:50 traditional investing advice sounds
0:52 great in theory, but never seems to work
0:55 when you actually need it to, subscribe
0:57 and like this video. It will help more
0:58 than you think. By the end of this
1:01 video, you'll understand the exact
1:03 concentration mechanism that every major
1:06 brokerage uses to funnel your money into
1:08 the same seven companies and why that's
1:09 setting you up for a crash that could
1:12 wipe out 20 years of savings in 18
1:14 months. I'm going to show you what I'd
1:16 actually do if I were starting from
1:19 scratch in 2026, knowing what I know now
1:22 about how markets really work versus how
1:24 they're sold to you. So, let's go back
1:27 to John Law in 1720. Here's what
1:30 happened. France was broke after too
1:32 many wars and they had this massive debt
1:35 problem. John Law shows up and says,
1:38 "Hey, I've got a solution. Let me start
1:40 a bank that issues paper money backed by
1:42 future profits from French territories
1:45 in America." The French government,
1:48 desperate for cash, agrees. Law creates
1:50 the Mississippi Company, which
1:52 supposedly owns all this valuable land
1:55 in Louisiana. He starts issuing shares.
1:57 People buy them because paper money is
2:00 easier than gold. And everyone's getting
2:02 rich on paper. The share price goes from
2:05 500 levers to 18,000 levers in less than
2:08 two years. Everyone in Paris is selling
2:10 their property, their jewelry,
2:12 everything to buy more shares. They're
2:14 camping outside Law's house trying to
2:16 get in on the next offering. But here's
2:19 the catch. The Louisiana territory was
2:22 basically worthless swamp land. There
2:25 was no gold, no profitable trade,
2:28 nothing generating actual revenue. Law
2:30 was just printing money and using new
2:32 investments to pay returns to earlier
2:36 investors. Classic scheme, right? But it
2:38 gets worse. Law knew it was
2:40 unsustainable. So he started printing
2:41 even more money to buy up the debt
2:44 himself, inflating the currency while
2:46 inflating the stock. The French
2:47 government loved it because their debt
2:49 was disappearing. So they gave him more
2:53 power. Then in 1720, people started
2:55 asking questions. They wanted to convert
2:58 their paper shares back to gold. Law
3:00 didn't have the gold. The bank couldn't
3:04 honor the conversions. Within 6 months,
3:07 the shares crashed from 18,000 LRA to
3:11 500, then to zero. People who had been
3:13 millionaires on paper were bankrupt. The
3:15 French economy collapsed so hard that
3:18 they banned paper money for decades. Law
3:20 fled the country and died. broke in
3:22 Venice nine years later. Here's who won.
3:24 The French government had unloaded a ton
3:26 of debt onto private investors who were
3:29 left holding worthless paper. A handful
3:31 of insiders who got out early walked
3:34 away wealthy. Here's who lost.
3:37 Basically, everyone else in France.
3:39 Middle-class families, small business
3:41 owners, people who believed the system
3:43 would protect them. And here's the
3:45 kicker. The bankers and government
3:48 officials who enabled law faced almost
3:51 zero consequences. They just moved on to
3:53 the next scheme. So what does this have
3:56 to do with investing in 2026?
3:58 Everything. Because right now you're
4:01 being sold the same concentrated bet
4:03 except instead of Louisiana swampland,
4:05 it's seven tech companies. Imagine
4:07 you're building a house and the
4:08 contractor says, "We're going to use the
4:12 best materials." Sounds great, right?
4:15 Then you find out that 70% of your
4:18 entire house, the foundation, the walls,
4:21 the roof, all of it is supported by
4:24 seven wooden beams. Those beams are
4:26 really strong right now. Strongest beams
4:28 on the market. But you're thinking,
4:30 "What happens if three of those beams
4:32 crack?" The contractor says, "Don't
4:34 worry. These beams have been getting
4:37 stronger every year for 15 years. Would
4:39 you live in that house? Would you raise
4:41 your kids there? because that's exactly
4:44 what your index fund is. As of early
4:48 2026, the S&P 500 index, the thing every
4:50 financial adviser tells you to buy and
4:52 hold forever, has more than 30% of its
4:55 total value concentrated in seven
4:59 companies. Apple, Microsoft, Nvidia,
5:03 Amazon, Alphabet, Meta, Tesla. Seven
5:07 companies out of 500. That's 1.4% 4% of
5:09 the companies holding nearly a third of
5:12 the weight. Back in the '90s, the top
5:15 seven companies made up maybe 15%. We've
5:17 doubled the concentration in 25 years,
5:19 and everyone's acting like this is
5:21 normal. Now, you might be thinking,
5:24 "Okay, but those companies are massive
5:26 and profitable. They print money."
5:29 That's true, but so did the Nifty50. Let
5:31 me tell you about the Nifty50 in the
5:34 early '7s. These were the 50 stocks that
5:36 every institutional investor said you
5:39 could buy and never sell. Blue chip
5:42 American companies like Polaroid, Xerox,
5:47 Kodak, Avon, Sears. The idea was that
5:50 these companies were so dominant, so
5:52 well-managed, so essential to American
5:55 life that you didn't even need to look
5:58 at the price, just buy and hold forever.
6:00 Growth was guaranteed. These stocks were
6:02 trading at price to earnings ratios of
6:07 50, 60, even 80 times earnings, which is
6:09 insane. But people said it didn't matter
6:12 because growth would catch up. Then 1973
6:16 happened. Oil crisis. Inflation spiked.
6:18 Recession hit. Suddenly, growth stocks
6:21 weren't growing. The Nifty50 crashed.
6:25 Polaroid fell 91% from peak to trough.
6:30 Avon fell 86%. Xerox fell 71%. These
6:32 weren't speculative startups. These were
6:34 the safest companies in America. And if
6:37 you bought at the peak in 1972, it took
6:39 you 25 years just to break even on some
6:41 of them, not counting inflation. A
6:44 quarter century of zero returns on the
6:47 safest investments. Here's what happened
6:50 step by step. First, institutional
6:52 investors decided that a small group of
6:54 stocks were so good that valuation
6:57 didn't matter. Second, they poured money
7:00 into those stocks, driving prices higher
7:03 and higher. Third, the high prices
7:05 became evidence of quality, creating a
7:07 feedback loop. Fourth, when economic
7:10 conditions changed, those overvalued
7:12 stocks had the furthest to fall. And
7:15 fifth, the diversification everyone
7:17 thought they had disappeared because all
7:20 the safe stocks crashed together. But
7:23 here's the part nobody talks about. Who
7:25 made money? The executives at those
7:28 companies who sold stock at the peak.
7:30 The investment banks who underwrote the
7:33 offerings and collected fees. The early
7:34 investors who got in at reasonable
7:37 prices and got out before the crash. Who
7:39 lost? Regular people who bought at the
7:41 top because their financial adviser said
7:44 it was safe. Pension funds that needed
7:46 steady returns. Retirees who thought
7:48 they were being conservative. And the
7:50 most surprising twist, the financial
7:52 industry learned nothing. They just
7:55 waited 20 years and did it again with
7:57 tech stocks in the late 90s, then again
8:01 with housing in 2007, and now again with
8:04 megaap tech in 2026.
8:05 So what does this pattern look like
8:09 today? Let's talk about Nvidia.
8:11 Incredible company, genuinely
8:13 revolutionary technology. I'm not saying
8:17 they're bad, but in 2023, Nvidia was
8:20 worth around $300 billion. By early
8:25 2026, they crossed $3 trillion. That's a
8:29 10 times increase in under three years.
8:32 Their revenue grew, sure, but not 10
8:34 times. What grew 10 times was the
8:37 multiple investors were willing to pay.
8:38 The same thing that happened with
8:41 Polaroid in 72. Now, you're asking
8:45 yourself, is Nvidia overvalued? Maybe,
8:47 maybe not. That's not even the point.
8:49 The point is that your index fund is now
8:51 massively dependent on Nvidia staying at
8:54 that valuation or going higher. If
8:56 Nvidia drops 50%, which is not some
8:58 crazy scenario given it's happened to
9:01 every high-flying tech stock eventually,
9:04 that alone takes almost 5% off the S&P
9:07 500. Add in similar drops for Apple,
9:10 Microsoft, and a couple others, and
9:13 you're down 20 to 30% even if the other
9:16 493 companies do fine. This is where it
9:19 gets really interesting. The system is
9:21 designed to hide this risk from you.
9:24 Here's how. First, they call it
9:27 diversification. You own an index fund
9:30 with 500 companies. That sounds
9:32 diversified. But if seven of those
9:34 companies are a third of your money,
9:36 you're not diversified. You're
9:39 concentrated. It's a linguistic trick.
9:42 Second, they use market cap waiting.
9:44 Sounds technical and smart, right? All
9:47 it means is that the stocks that have
9:49 already gone up the most get the biggest
9:51 share of new money. You're automatically
9:53 buying more of what's expensive and less
9:56 of what's cheap. It's the opposite of
9:58 what every successful investor actually
10:01 does. Third, they show you long-term
10:04 charts that smooth out the crashes.
10:06 Yeah, the market always recovers
10:09 eventually, but eventually might be 25
10:13 years, and you might not have 25 years.
10:14 Let me give you the emotional reframe
10:17 you need. You are not a passenger in
10:20 this system. You are the product. The
10:22 financial industry makes money from fees
10:25 and volume, not from your returns. When
10:28 they say buy and hold index funds, what
10:30 they mean is give us your money and
10:33 don't ask questions for 30 years while
10:35 we collect our percentage regardless of
10:37 what happens. I'm not saying index funds
10:40 are evil. I'm saying blind index
10:42 investing in 2026 is playing a game
10:44 where the rules are rigged against you.
10:46 So, if I were starting fresh right now,
10:49 knowing what I know, here's exactly what
10:52 I'd do. Not what sounds good in theory,
10:54 not what worked in 2010, but what
10:57 actually makes sense given the current
10:59 concentration risk and market structure.
11:02 Action step one, I check my actual
11:05 exposure right now. not what I think I'm
11:08 exposed to, what I'm actually exposed
11:12 to. If you own an SNP 500 index fund or
11:15 a total market fund, go look up the top
11:19 10 holdings. Add up the percentages. If
11:21 it's more than 25% in the top 10, you're
11:24 concentrated, not diversified. Most
11:26 people have never done this. They just
11:28 assume index fund equals safe. Go look
11:32 tonight. Vanguard, Fidelity, Schwab,
11:34 whoever you use, they publish the
11:36 holdings. Five minutes, do it. Action.
11:39 Step two, I'd implement what I call the
11:42 inverse concentration strategy. Here's
11:44 how it works. Instead of letting market
11:47 cap waiting automatically put 30% of my
11:50 money into seven stocks, I'd manually
11:52 create a position that does the
11:54 opposite. You can buy equal weight index
11:57 funds where all 500 companies get the
12:01 same allocation regardless of size. Or
12:03 you can buy international developed
12:05 markets which are trading at 15-year low
12:09 valuations compared to US stocks. Or you
12:12 can buy small and midcap value stocks
12:13 which have historically outperformed
12:16 large cap growth over 20-year periods
12:18 but have been left behind for the last
12:20 decade. I'm not saying sell everything
12:23 and go allin on small caps. I'm saying
12:25 if the market is automatically
12:26 concentrating your risk in seven
12:29 companies, you need to manually
12:31 rebalance that risk somewhere else. If
12:34 30% of a standard index is in mega cap
12:37 tech, maybe 30% of your portfolio goes
12:39 into things that are negatively
12:42 correlated or at least uncorrelated.
12:45 emerging markets, commodities, real
12:47 estate investment trusts that actually
12:50 own physical property, treasury
12:52 inflation protected securities if you're
12:54 worried about inflation coming back.
12:56 Here's the math on why this matters.
12:59 Let's say you have $500,000 in a
13:03 standard SNP500 fund. About 150,000 of
13:06 that is in the big seven tech stocks. If
13:09 those stocks drop 50% over the next two
13:12 years, which happened to the Nifty50 and
13:16 happened to tech stocks in 2000 to 2002,
13:19 you just lost $75,000 from that
13:21 concentration alone.
13:23 The other 350,000 might stay flat or
13:26 drop less, but you're still down 15%
13:29 overall just from seven stocks. Now,
13:32 imagine you had rebalance 6 months ago.
13:36 you moved 75,000 of that 150,000 into
13:39 equal weight or international or small
13:42 cap value. Those alternatives might also
13:44 drop, but they won't drop 50% because
13:46 they're not as overvalued. Maybe they
13:50 drop 20%. Now you've lost 15,000 instead
13:52 of 75,000.
13:55 That's $60,000 of protection just from
13:57 recognizing the concentration risk. But
13:59 now you might be thinking, what if those
14:01 seven stocks keep going up? What if
14:05 Nvidia hits 5 trillion and I miss out?
14:07 Here's the thing. You have to decide
14:09 what you're optimizing for. Are you
14:10 trying to maximize your upside if the
14:12 current trend continues forever? Or are
14:14 you trying to build actual wealth that
14:17 survives different market conditions?
14:20 Because nobody, and I mean nobody, can
14:22 tell you when the music stops. John
14:24 Law's Mississippi Company looked like a
14:28 sure thing until it didn't. The Nifty50
14:30 looked unstoppable until they stopped.
14:33 Housing prices only go up until they go
14:35 down. I'd rather make 70% of the gains
14:38 in a bull market and avoid 70% of the
14:40 losses in a bare market than swing for
14:43 the fences and risk losing everything.
14:45 That's not being scared, that's being
14:48 smart. The people who got rich and
14:49 stayed rich are the ones who didn't blow
14:52 up. Action step three, I'd set up what I
14:56 call valuation trip wires. These are
14:58 automatic rules that force me to
15:00 rebalance when things get crazy because
15:02 in the moment you won't want to. In
15:05 1999, people who sold tech stocks looked
15:07 stupid for 2 years. Then they looked
15:10 like geniuses. You need rules that
15:13 remove emotion. Here's an example rule.
15:15 If any single stock in my portfolio
15:18 becomes more than 8% of my total account
15:20 value, I automatically sell enough to
15:24 bring it back to 8%. If the SNP500 price
15:27 to earnings ratio goes above 30, I
15:30 automatically move 10% of my stock
15:33 allocation into bonds or cash. If the
15:35 top 10 holdings in my index fund exceed
15:38 30% of the total, I rebalance into equal
15:40 weight. These aren't market timing.
15:43 These are valuation discipline. You're
15:44 not trying to predict crashes. You're
15:46 limiting your exposure to expensive
15:49 assets and rebalancing into cheaper
15:51 ones. This is what every successful
15:53 endowment in sovereign wealth fund does,
15:55 but retail investors are told to just
15:58 buy and never sell. Action step four,
16:00 and this is the one nobody talks about.
16:03 I'd build an income floor outside the
16:06 market. This is psychological as much as
16:09 financial. The reason people panic sell
16:11 at the bottom is because they need the
16:13 money and the market is crashing and
16:16 they have no other option. If you have
16:18 12 months of expenses in a high yield
16:21 savings account earning 4 to 5%. And you
16:23 have some dividend paying stocks or
16:24 bonds throwing off even a small amount
16:26 of income, you can survive a market
16:29 crash without selling at the bottom. You
16:31 can wait it out. You can even buy more
16:34 when things are cheap. Here's the math.
16:37 If you spend $60,000 a year, you need
16:39 60,000 in accessible cash or
16:42 equivalents. Yeah, that's money that's
16:44 not compounding the market, but it's
16:46 insurance that lets you stay in the
16:49 market when everyone else is forced out.
16:53 During 2008, people with cash bought
16:57 stocks at 50% off. People without cash
17:00 sold at 50% off to pay their mortgage.
17:03 Same event, opposite outcomes, entirely
17:06 based on having a buffer. I'd also look
17:08 hard at building income streams that
17:10 aren't tied to my portfolio value. This
17:13 could be a side business, rental income
17:15 from real estate, royalties from
17:18 something you create, even a part-time
17:20 consulting gig in your field. The goal
17:22 is that if the market cuts your
17:24 portfolio in half, your life doesn't
17:27 fall apart. You're not desperate.
17:29 Desperation makes you sell low and buy
17:32 high, which is how wealth gets
17:34 transferred from regular people to
17:37 institutions. Action step five. I'd get
17:41 really honest about time horizon. The
17:44 advice to buy and hold for 30 years is
17:47 great if you're 25. If you're 45 and
17:49 planning to retire at 60, you don't have
17:52 30 years to recover from a crash. You
17:55 have 15 years. And if a major crash
17:57 happens in year 10, you're screwed. The
18:00 sequence of returns matters as much as
18:03 the average return. Two people can get
18:06 the same average annual return over 20
18:09 years. But if one person has a crash
18:11 right before retirement and the other
18:13 has it early in their career, the first
18:15 person runs out of money and the second
18:18 person is fine. If you're within 10
18:20 years of needing the money, whether
18:22 that's retirement or buying a house or
18:24 funding a kid's college, you cannot
18:27 afford to have 30% of your portfolio in
18:29 seven stocks that are priced for
18:32 perfection. You need to derisk, even if
18:34 it means lower returns. Because losing
18:38 25% when you're 55 is not the same as
18:42 losing 25% when you're 30. At 30, you
18:46 have time and income to recover. At 55,
18:49 that loss might be permanent. So, here's
18:50 the bigger picture. The financial
18:53 industry has spent 40 years convincing
18:56 you that investing is complicated and
18:58 you need experts and then the experts
19:00 tell you to buy index funds and do
19:02 nothing, which is the least complicated
19:05 strategy possible. Why? Because it's
19:08 profitable for them and easy to scale.
19:10 They're not wrong that index funds are
19:11 better than picking individual stocks
19:13 for most people, but they're lying by
19:15 omission when they act like all index
19:17 funds are the same and concentration
19:20 risk doesn't exist. Just like John Law
19:22 convinced France that paper money backed
19:23 by nothing was the same as gold, the
19:25 financial industry has convinced you
19:28 that an index fund with 30% in seven
19:31 stocks is the same as diversification.
19:35 It's not. It's a concentrated bet on the
19:37 continued dominance of a handful of
19:39 companies that are trading at valuations
19:41 that have historically preceded major
19:44 crashes. Now, am I saying those seven
19:46 companies are going to crash tomorrow?
19:49 No, I have no idea. And neither does
19:52 anyone else. Microsoft might be worth 10
19:54 trillion in 5 years or might be worth 1
19:56 trillion. What I'm saying is that if
19:58 you're not aware of the concentration,
20:00 if you're not actively managing that
20:02 risk, you're making the same mistake
20:03 that people made with the Mississippi
20:06 company and the Nifty50 and do stocks
20:09 and housing. You're assuming that what's
20:12 worked recently will work forever, and
20:14 you're ignoring the structure of the bet
20:16 you're actually making. Let me tell you
20:18 what the smart money is doing. And by
20:20 smart money, I don't mean hedge funds
20:22 doing crazy derivatives. I mean
20:24 endowments and foundations that need to
20:26 generate returns for decades without
20:29 blowing up. Yale's endowment, often
20:30 considered one of the best managed pools
20:34 of money in the world, has less than 10%
20:38 in US stocks. 10%. The rest is in
20:40 private equity, real assets, foreign
20:43 markets, absolute return strategies,
20:45 things that don't move in lock step with
20:48 the SNP 500. They're not trying to beat
20:50 the index every single year. They're
20:52 trying to compound wealth across
20:54 different economic environments without
20:57 catastrophic losses. You can't replicate
21:00 Yale's endowment as a regular person.
21:01 You don't have access to the same
21:04 investments, but you can replicate the
21:07 philosophy. Diversify across asset
21:10 classes that don't all crash together.
21:12 Don't let any single bet, whether it's a
21:15 company or a sector or a country, become
21:17 too big. Rebalance from expensive to
21:20 cheap. Build income sources outside your
21:24 portfolio. Boring, I know, but boring is
21:27 what survives. Here's what I'd avoid in
21:31 2026. I'd avoid anything that's sold as
21:34 you can't lose or guaranteed returns or
21:36 safe as the market. If it sounds too
21:40 good to be true, it is. I'd avoid trying
21:42 to time the market by going to cash and
21:44 waiting for a crash because you'll miss
21:46 years of gains and probably get back in
21:48 at the wrong time anyway. I'd avoid
21:50 complex products I don't understand,
21:53 leverage ETFs, inverse funds, option
21:56 strategies sold by gurus on YouTube. If
21:57 you can't explain how it makes money to
22:00 a 12-year-old, don't put your savings in
22:02 it. And I'd avoid the temptation to do
22:04 nothing just because doing something
22:06 feels overwhelming. Doing nothing right
22:08 now when concentration is at historic
22:12 highs is an active choice to accept that
22:15 risk. It's not neutral. You're not being
22:18 patient. You're being passive and
22:20 there's a difference. Let's talk about
22:22 the psychological shift that needs to
22:24 happen. Most people treat their
22:27 portfolio like a plant. Water it with
22:29 regular contributions, leave it in the
22:32 sun, check on it once a year, hope it
22:36 grows. That worked great from 1980 to
22:41 2000 and from 2009 to 2021 when we had
22:43 multi-deade tailwinds of falling
22:46 interest rates and expanding valuations.
22:48 But those tailwinds are over. Interest
22:51 rates are higher and unlikely to go back
22:53 to zero. Valuations are already at the
22:56 top end of historical ranges. You can't
22:57 just plant your money and forget it
22:59 anymore. You have to treat your
23:02 portfolio like a garden. You still plant
23:06 and water, but you also weed, you prune,
23:09 you rotate crops, you adapt to the
23:11 seasons. That doesn't mean daily trading
23:13 or obsessing over every headline. It
23:16 means quarterly check-ins where you look
23:18 at valuation, rebalance what's gotten
23:22 too big, trim what's expensive, add to
23:25 what's cheap. It's active management in
23:27 the sense of being engaged, not active
23:29 trading in the sense of constant buying
23:31 and selling. The reason this matters
23:33 emotionally is that when the next crash
23:36 comes, and it will come because crashes
23:39 always come, you need to know that you
23:41 did something. If you just bought a
23:44 standard index fund and hoped, you're
23:45 going to feel like a victim when it
23:49 drops 30 or 40%. You'll panic. You'll
23:51 sell at the bottom. You'll swear off
23:53 stocks forever. But if you've already
23:55 taken steps to reduce concentration, to
23:57 build an income floor, to diversify
24:00 across assets, you'll feel like you
24:02 prepared. You won't be happy about the
24:05 losses, but you won't be destroyed.
24:06 You'll be able to hold on or even buy
24:09 more. And that's the difference between
24:11 people who build wealth through cycles
24:13 and people who get wrecked. Here's a
24:16 scenario to make it concrete. It's late
24:19 2027. There's been some kind of shock.
24:21 Doesn't matter what recession,
24:24 geopolitical crisis, tech regulation,
24:28 whatever. The mega cap tech stocks drop
24:34 40% in 6 months. The SNP 500 drops 28%
24:37 overall. Your coworker who has
24:39 everything in a standard index fund and
24:43 needed to retire in 2028 now has to work
24:46 three more years because his portfolio
24:50 went from $900,000 to $650,000.
24:53 He's angry. He's scared. He sells half
24:56 of what's left and puts it in cash,
24:58 locking in the losses. The market
25:00 recovers over the next 3 years, but he
25:01 missed most of it because he was in
25:05 cash. You on the other hand rebalanced a
25:07 year earlier. You move some money into
25:09 equal weight, some into international,
25:12 some into bonds. You kept a cash buffer.
25:16 Your portfolio drops 20% instead of 28%.
25:19 Not fun, but you knew it could happen.
25:21 You don't need the money for five more
25:24 years and you have a year of expenses in
25:26 cash, so you don't have to sell.
25:29 Actually, you take some of that cash and
25:31 buy stocks at lower prices. 3 years
25:34 later when things recover, your
25:36 portfolio is higher than it was before
25:39 the crash. Same market, different
25:41 outcome because you prepared. That's
25:44 what I mean by taking control. You can't
25:46 control what the market does, but you
25:48 can control your exposure, your
25:51 liquidity, your emotional resilience.
25:53 Most people give up all three because
25:55 they're told that investing is either
25:57 too complicated for them or so simple
25:59 that they shouldn't think about it. Both
26:02 are lies designed to keep you passive.
26:04 Let me give you one more historical
26:07 example to drive this home. In 1989,
26:09 Japan's stock market was the largest in
26:14 the world. The NIK index hit 38,915.
26:15 Japanese companies were buying up
26:17 American real estate. Everyone said
26:19 Japan would overtake the US
26:21 economically. And Japanese stocks traded
26:24 at 60 times earnings because growth was
26:26 inevitable. If you were a Japanese
26:28 investor in 1989 and you listened to the
26:30 experts who said just buy the index and
26:33 hold, you would have lost 75% over the
26:36 next 3 years. The NIK bottomed around
26:39 7,000 in 2003.
26:43 As of 2026, 37 years later, it only
26:47 recently got back to the 1989 peak. 37
26:51 years of zero real returns. Now, Japan
26:54 had specific structural problems, demographics,
26:56 demographics,
26:59 debt, zombified banks, but the point is
27:02 that the market always comes back. Is
27:03 only true if you're talking about the
27:06 global market over a century. Specific
27:08 markets can stay down for decades. And
27:10 even in the US, which has been the best
27:13 performing market in the world, there
27:15 have been stretches where stocks went
27:19 nowhere. 1966 to 1982 basically flat
27:23 after inflation. 2000 to 2012 flat. If
27:26 you retired at the wrong time, you were
27:28 in trouble. So the lesson is not don't
27:31 invest in stocks. It's don't assume that
27:33 what worked for the last 15 years will
27:36 work for the next 15. The US market has
27:38 been the best performing in the world.
27:40 Mega cap tech has been the best
27:43 performing sector. passive indexing has
27:46 been the best performing strategy. All
27:48 of those could reverse and if they do,
27:51 the people who were 100% in a cap
27:54 weighted US index fund will suffer the
27:57 most. What would I actually buy in 2026
27:59 if I were building a portfolio from
28:02 scratch? Here's the mix I'd start with,
28:04 and I want to be clear, this is not
28:06 financial advice. This is what I'd do
28:08 for myself, knowing my risk tolerance
28:12 and time horizon. 30% in a diversified
28:14 US stock fund that's equal weight or
28:17 tilted towards small and midcap value,
28:20 20% in international developed markets,
28:23 Europe, Japan, Australia, places that
28:26 are cheaper than the US right now, 10%
28:28 in emerging markets for long-term growth
28:32 exposure. 15% in real assets. This could
28:35 be REITs, commodities, infrastructure
28:37 funds, things that do well when
28:41 inflation picks up. 15% in bonds, a mix
28:44 of treasuries for safety, and corporate
28:47 bonds for yield, 10% in cash or
28:49 short-term equivalents, your emergency
28:53 fund and opportunity fund. That's 100%.
28:55 And notice that none of it is in a
28:58 standard cap weighted SNP500 fund. I'm
29:02 not opposed to those funds, but in 2026,
29:05 given the concentration risk, I'd rather
29:08 build diversification manually. This mix
29:10 gives you exposure to stocks for growth,
29:12 international for diversification, real
29:15 assets for inflation protection, bonds
29:18 for stability, and cash for flexibility.
29:21 No single position dominates. If tech
29:23 crashes, you're not destroyed. If
29:25 inflation spikes, you have some
29:28 protection. If interest rates rise, your
29:30 bonds might suffer, but your cash can be
29:31 redeployed. You're not trying to predict
29:33 the future. You're trying to survive
29:35 different versions of it. Would this
29:38 portfolio beat the S&P 500 if the
29:40 current concentration trend continues
29:43 and those seven stocks double again? No,
29:46 it wouldn't. You'd underperform. And
29:48 that's okay. Because if the
29:50 concentration reverses and those seven
29:54 stocks crash, you'd outperform by a huge
29:56 margin. You're trading maximum upside
29:58 for lower downside. And at a certain
30:00 point in your wealth building journey,
30:02 that's the right trade. When you're
30:05 trying to get your first $100,000,
30:08 sure, take more risk. When you're trying
30:11 to protect 500,000 or a million, not
30:12 losing it becomes more important than
30:14 doubling it. Here's the final
30:17 psychological shift. Wealth is not built
30:19 by hitting home runs. It's built by not
30:22 striking out. If you can generate decent
30:25 returns, 7 to 9% a year, and avoid
30:28 catastrophic losses, you'll end up in
30:31 the top 10% of investors over 30 years.
30:33 The people who chase 15% returns are the
30:35 same people who blow up when they hit a
30:38 bad stretch. Slow and steady actually
30:40 wins, but only if you're steady through
30:42 the rough patches, and you can only be
30:44 steady if you've prepared. So, if I
30:47 wanted to invest in 2026, I'd start by
30:49 admitting that the environment is
30:51 different than it was in 2010 or even
30:54 2020. Valuations are high, concentration
30:56 is extreme, the easy gains from falling
30:59 rates are over. I'd check my actual
31:02 exposure and fix any concentration risk.
31:04 I'd build a cash buffer so I'm never
31:07 forced to sell at the bottom. I'd
31:10 diversify across assets and geographies,
31:12 not just companies. I'd set up rules to
31:14 rebalance automatically so I don't have
31:16 to rely on willpower. And I'd accept
31:18 that I might underperform in the short
31:21 run if the current trends continue. But
31:23 I'd sleep better knowing I'm not betting
31:26 everything on seven companies staying
31:29 expensive forever. That's it. Not
31:31 complicated, not sexy, not going to make
31:34 me a millionaire in 12 months. But it's
31:36 real. It's based on how markets actually
31:38 work. And it's designed to survive
31:40 different outcomes instead of relying on
31:43 one specific thing to keep happening.
31:45 Most people won't do this because it
31:47 requires effort and it means admitting
31:49 that the default option might not be the
31:51 best option. But if you're still
31:54 watching, you're not most people. You're
31:56 someone who actually wants to understand
31:59 this stuff and make smart decisions, not
32:01 just follow the crowd off a cliff. So go
32:03 check your portfolio tonight. Look at
