The S&P 500 Index is off to a positive start so far this year, but it might be deceptive.

While the broad market benchmark for U.S. large-cap stocks ended the first quarter up more than 7%, most of the return was concentrated in the index’s largest 10 stocks. They accounted for nearly 30% of the S&P 500’s market capitalization and were up more than 30% on average. An index of the next 490 stocks in the S&P 500 returned a mere 4%.

From AMG’s standpoint, this is not an indication of a healthy bull market. Instead, it appears that many investors are still using the pandemic playbook—buy the biggest U.S. growth stocks and relax as the Federal Reserve (Fed) tries to fix the economy. It was a highly successful strategy from 2019 through 2021, when the S&P 500 total return averaged more than 26% a year, with most of that return being driven by the index’s top stocks.

But that was an unusual time—the Fed is now raising interest rates, not cutting them, and the federal government is no longer mailing COVID-19 relief checks to households and businesses across America.

So, what should investors do? AMG recommends going back to an even older playbook, one that applies when a more traditional business cycle nears its end. The likely best play is to stay safe—hold stocks with more conservative characteristics but hold fewer stocks than normal and more bonds. Churn out the first downs, don’t throw it deep.


Talk to your advisor about your situation, cash need and risk tolerance on navigating this tricky environment.

Not a client? Find out more about AMG’s Personal Financial Management (PFM) or to book a free consultation call 303-486-1475 or email us the best day and time to reach you.


AMG’s opinions are subject to change without notice, and this report may not be updated to reflect changes in opinion. Forecasts, estimates, and certain other information contained herein are based on proprietary research and should not be considered investment advice or a recommendation to buy, sell or hold any particular security, strategy, or investment product.

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