Extreme concentration in ten mega-cap stocks (nearly 50% of the S&P) and a similar looming concentration among five banks and five tech companies in fixed income means private markets are now the only real source of diversification for investors.
Rowan argues that with ten stocks nearly half the S&P and fixed-income markets heading toward similar concentration among a handful of banks and tech firms, private markets — where trillion-dollar companies like Anthropic and OpenAI live — are the only place left to diversify. ✦ AI generated
Marc Rowan · a16z Podcast · 2026-05-27 · original ↗
starts at this moment · 10:36
10 stocks right now in the US are nearly 50% of the S&P and they're all levered to the same trend. Dominated historically by 10 large banks, it's about to be dominated by five large banks and five large tech companies. As much concentration as exists in the equity market, that's how much concentration is going to exist in the fixed income market. And so if you're an investor and you're looking for diversification, there's no place to get it other than private markets.
verbatim transcript · starts at 10:36
10:36>> And finally we are diversification for public markets and this is the least understood portion >> of what we do. 10 stocks right now in the US are nearly 50% of the S&P and they're all levered to the same trend. >> Yep. >> So far that's been amazing. >> Yep. But we've levered most of the retirement system of the country. Yep. >> To 10 stocks. We can question in
10:59hindsight the wisdom of that if things go poorly. And so the same thing, by the way, is happening in the global fixed income market. >> Dominated historically by 10 large banks, it's about to be dominated by five large banks and five large tech companies. As much concentration as exists in the equity market, that's how much concentration is going to exist in the fixed income market. And so if
11:22you're an investor and you're looking for diversification, there's no place to get it other than private markets. Private markets are 80% of the action going on in the world. >> And if you think about what's going on, great companies, Enthropic, Open AI, SpaceX, Cognition, Cursor, >> and on and on and on. Every one of those companies is private, multiple trillion dollars >> of value and yet most investors have
11:53zero exposure to them. >> We we're going to see the same thing happen with industrial companies. Lots of industrial companies are just going to decide to stay private longer for all the reasons we know. And so when I think about the business today, it is serving those fundamental goods. But it is also built on trends. The trends are the world is getting older. People have not adequately saved for retirement. There's
12:18this massive retirement income gap that's driving our business forward. >> They need income. Well, at the same time, corporations are borrowing money like every dollar since the invention of fire >> to build infrastructure, to build energy, to do energy transmission, to do next-gen manufacturing, to do AI, to do defense, to do data centers, and it's all happening at once. And so mostly investment grade borrowers, large companies against modern trends matching
- ·Ten US stocks now make up nearly 50% of the S&P
- ·All ten are levered to the same trend
- ·Traditional diversification within equities is effectively gone
- ·Bond market historically dominated by ten large banks
- ·Shifting to dominance by five banks and five tech firms
- ·Fixed-income concentration will match equity-level extremes
- ·Public equity and fixed income both lack diversification
- ·Private markets hold trillion-dollar firms like Anthropic and OpenAI
- ·Rowan: no other place left for investors to diversify