The stock market’s power law is getting more extreme. The Magnificent Seven now represent 36.6% of the S&P 500 as of October 2025, up from just 12.3% in 2015—an unprecedented concentration level that echoes the height of the Industrial Revolution a century ago. For investors who assumed their S&P 500 index fund offered broad diversification, this is a sobering reality check.

The question now facing portfolio managers and individual investors alike is whether this historic concentration warrants a fundamental shift away from passive indexing toward more actively managed strategies that can navigate around—or at least manage—this mega-cap dominance.