2025-12-25 13:23:50

Recent market data has exposed a long-lost phenomenon—extreme divergence.

According to institutional forecasts, between 2024 and 2025, the implied correlation among individual stocks in the S&P 500 and Nasdaq 100 will fall to its lowest point in nearly 23 years. What does this mean? Simply put, most stocks are starting to "go their own way," no longer closely following the broader market. Even if the indices rise, the stocks in your portfolio may remain unchanged.

More interestingly, looking ahead to 2026, the average correlation of individual stocks is expected to be around 23%—the lowest in over a decade. This may seem like good news, but it actually reflects a harsh reality: the market is highly concentrated. A few giant stocks are performing solo, and their gains or losses determine the overall market sentiment.

The market has never been so extreme. For investors, stock-picking ability has become a matter of life and death.

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MagicBean

· 7h ago

Really, that's why I've been focusing on the fundamentals of individual stocks lately. The overall market's ups and downs are just unreliable. Picking the wrong one can lead to heavy losses; beyond the seven giants, it's all about luck. If this wave of differentiation continues, retail investors will find it very hard to survive without professional stock-picking skills. The giants are eating the meat, while small stocks are drinking the soup. It feels more and more competitive. So, index funds might really become the safe choice. Stop messing around. Correlation at 23%? How do you play... What kind of stock-picking skills does that require?

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WhaleWatcher

· 7h ago

This is a winner-takes-all game; choosing the wrong stocks can really lead to heavy losses.

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AlphaWhisperer

· 7h ago

Damn, that's why I haven't made much money from the seven or eight stocks I've been watching recently, while the index has gone crazy up. Stock picking has become a life-and-death game? No wonder those who keep bragging about their "professional stock selection" have shut up haha. Now you really need some skills, or you're just along for the ride. Wait, which are the big giants? It feels like only a few companies are monopolizing the market. With such a high level of differentiation, how can retail investors play? It really just comes down to luck.

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