The Stock Market Is Doing Something Observed Only Once Before. History Is Clear About What Comes Next.
History has both good and not-so-good news for investors.
Overview
After months of stagnating growth, major market indexes have rallied. The S&P 500 (SNPINDEX: ^GSPC), Nasdaq Composite (NASDAQINDEX: ^IXIC), and Dow Jones Industrial Average (DJINDICES: ^DJI) have surged by 6%, 9%, and 5%, respectively, since late July alone, as of this writing.
That doesn't necessarily mean investors are in the clear, however. An unexpectedly dismal jobs report last week suggests that the economy may not be as robust as previously thought. The market is also becoming increasingly concentrated in tech, with chip stocks alone making up roughly 14% of the S&P 500.
Details
This diminishing diversification could lead to greater risk during the next downturn, as a relatively small sector could have an outsize impact on the broader market. And right now, the market is sounding a warning sign that has occurred only once before -- during the lead-up to the dot-com bubble burst.
Source
Originally published at www.fool.com.
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