Long-term investors have traditionally been advised to maintain their positions during market fluctuations, but the current S&P 500 landscape, dominated by a few tech stocks, presents unique challenges.
The equal-weight S&P 500 approach, which was suggested to reduce risk from this concentration, has not yielded the expected benefits, as it has consistently underperformed the standard market-weighted index for nearly four years. In September 2026, the equal-weight index fell over 4%, marking its longest losing streak since 2022.
Goldman Sachs noted that market breadth is at its lowest since the dotcom bubble, indicating that fewer stocks are contributing to overall gains. A significant portion of the S&P 500's returns has come from a select group of AI stocks, which raises concerns about the sustainability of this performance.
Experts like Todd Rosenbluth from TMX VettaFi suggest that investors should not abandon equal-weight strategies but rather combine them with market-cap-weighted ETFs to balance exposure. Additionally, diversifying into mid-cap funds or sectors like natural resources and energy could provide stability.
The analysis from DataTrek Research highlights that the equal-weight S&P 500 has underperformed since 2015, with only brief periods of outperformance. As tech stocks face renewed scrutiny, investors are encouraged to consider a diversified approach that includes both equal-weight and market-cap-weighted investments to manage risk effectively