The stock market is more concentrated than ever, with the top 10 US companies making up 43% of the S&P 500. Large-cap tech stocks dominate, with Nvidia alone representing 8% of the index. This concentration has increased by 8.2 percentage points in just over 15 months.

Despite concerns of an overvalued market, historical data suggests that increased concentration is a sign of a bull market. Strategies like equal-weight S&P 500 index funds have not performed as well as cap-weighted ones. Buying high-quality fixed income and diversifying beyond the S&P 500 can help manage risk.

Market concentration is leading many to fear a market plunge, but historical data doesn’t support this view. Using asset allocation rules and diversifying beyond the S&P 500 can help manage risk. International markets have outpaced the US this year, making global investment more appealing.

It’s important to embrace investing rules and resist the urge to time the market. Owning everything based on market capitalization harnesses collective investor information. Stick to your plan, own the world at low costs, and rebalance with high-quality fixed income to weather market uncertainties.

Read more at Yahoo Finance: Worried About Record Stock Market Concentration? Us, Too