Latest / Felix Nikolas Prehn's Podcast / Felix Prehn - EXPOSED: America’s Brutal Index Fund Problem + Stock Market News 17 November 2025

Transcript

Felix Prehn - EXPOSED: America’s Brutal Index Fund Problem + Stock Market News 17 November 2025 · Felix Nikolas Prehn's Podcast

• 0:00
  SPEAKER_00: Hidden power players are gambling with your retirement.
• 0:04
  SPEAKER_00: And they're profiting massively from a risk that almost nobody is talking about.
• 0:09
  SPEAKER_00: We're talking index funds, SPY, Vu, IVV, the investments everyone says are safe and diversified.
• 0:18
  SPEAKER_00: What if I told you they're actually a massive risk?
• 0:22
  SPEAKER_00: And the reason Wall Street won't tell you this because it's incredibly profitable for them.
• 0:29
  SPEAKER_00: Right now, 37% of the SP 500 is concentrated in just seven companies.
• 0:35
  SPEAKER_00: Yes, yes, I know you know this, but hear me out for one minute.
• 0:38
  SPEAKER_00: The last time we saw concentration like this was during the tot-com bubble crash.
• 0:45
  SPEAKER_00: And that crash wiped out a whopping 49% of the market.
• 0:50
  SPEAKER_00: Because here's what I don't want you to understand.
• 0:52
  SPEAKER_00: Trillions of dollars flowing into index funds created the concentration.
• 0:58
  SPEAKER_00: But the terrifying part is it works both ways.
• 1:02
  SPEAKER_00: When the money flows out, that same mechanism turns into a death spiral.
• 1:07
  SPEAKER_00: So in the next 30 minutes, I'm going to expose exactly how these power players are using your money.
• 1:15
  SPEAKER_00: Why this concentration is far more dangerous than 2000, and most importantly, what you can do right now to protect yourself.
• 1:24
  SPEAKER_00: My name is Felix Prien.
• 1:25
  SPEAKER_00: I'm an ex-investor banker.
• 1:26
  SPEAKER_00: You can tell he makes the presentations around here.
• 1:28
  SPEAKER_00: Clearly, it was Winston who wanted to get his picture in there.
• 1:32
  SPEAKER_00: And I'm going to show you what's really happening behind the scenes.
• 1:36
  SPEAKER_00: And as Winston says, I've seen how the sausage gets made.
• 1:40
  SPEAKER_00: I've watched institutional money move markets.
• 1:43
  SPEAKER_00: What I'm seeing right now is, well, it's giving me serious flashbacks to 1999.
• 1:48
  SPEAKER_00: And I'm going to show you the actual data, not opinions, not fear-mongering, just cold hard facts.
• 1:54
  SPEAKER_00: My mission is simple.
• 1:56
  SPEAKER_00: I want to give you the information Wall Street has and may or may not want retail investors to have.
• 2:02
  SPEAKER_00: Because when you understand how the game is played, you can actually win.
• 2:06
  SPEAKER_00: So by the end of this video, my promise to you is that you'll understand the three biggest risks hiding in your index funds.
• 2:13
  SPEAKER_00: You know exactly how to check if your portfolio is overexposed and you have a clear action plan, whether that's just adjusting your positions, hedging your bets, or just sleeping better at night, knowing what you own.
• 2:27
  SPEAKER_00: And I've done one better for you as well.
• 2:29
  SPEAKER_00: There is a free workbook that comes with this because it's going to be a lot of information, a lot of data, might be a little bit like dense.
• 2:36
  SPEAKER_00: So you can download that in our free community at feedexfriends.org slash protocol, and you can get access and you can get your pause on that.
• 2:43
  SPEAKER_00: And I'm sure it'll be full of pictures of Winston if he has anything to do with it.
• 2:47
  SPEAKER_00: All right, so let's start with the basics because I want everyone following along here.
• 2:51
  SPEAKER_00: Okay, I'm going to assume no knowledge.
• 2:52
  SPEAKER_00: An index fund is supposed to be the ultimate set it and forget it investment.
• 2:57
  SPEAKER_00: You buy something like SPY, uh, Vu or IVV.
• 3:02
  SPEAKER_00: These funds track the SP 500, the 500 largest publicly traded companies in America.
• 3:08
  SPEAKER_00: The pitch is simple.
• 3:10
  SPEAKER_00: You get instant diversification across 500 companies.
• 3:15
  SPEAKER_00: You pay almost nothing in fees, and historically, you get about a 10% return per year.
• 3:20
  SPEAKER_00: Sounds good, right?
• 3:21
  SPEAKER_00: Now, for decades, this has been the gold standard advice.
• 3:24
  SPEAKER_00: You just buy the index and hold.
• 3:26
  SPEAKER_00: And honestly, for most people, it's been great advice.
• 3:29
  SPEAKER_00: But here is where things get well interesting.
• 3:34
  SPEAKER_00: As of November 2025, if I'm recording this, seven companies represent about 37% of the entire market.
• 3:44
  SPEAKER_00: So let me put this another way.
• 3:45
  SPEAKER_00: That means 1.4% of companies are 37% of its weight.
• 3:53
  SPEAKER_00: They're the so-called magnificent seven.
• 3:56
  SPEAKER_00: You would know these guys.
• 3:57
  SPEAKER_00: It's Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta, and Tesla.
• 4:01
  SPEAKER_00: Now you might be thinking, Felix, these are great companies.
• 4:04
  SPEAKER_00: What's the problem?
• 4:05
  SPEAKER_00: What's the fear mongering about?
• 4:07
  SPEAKER_00: No fearmongering here, just facts.
• 4:10
  SPEAKER_00: The problem is this when you buy an SP 500 index fund, thinking you're getting diversification across 500 companies, you're actually making a massive bet on seven tech stocks.
• 4:19
  SPEAKER_00: Here's the math.
• 4:20
  SPEAKER_00: If you put$10,000 into an SP 500 index fund today,$3,500 of that goes to these seven tech companies, and the other 493 get 6,500.
• 4:34
  SPEAKER_00: So it's not diversification, it's concentration disguised as diversification.
• 4:41
  SPEAKER_00: Now here's what really keeps me up at night.
• 4:44
  SPEAKER_00: Back in 2015, just 10 years ago, these same companies were 12%.
• 4:53
  SPEAKER_00: So in 2015, these guys were just 12%.
• 4:57
  SPEAKER_00: They've tripled their weight in a decade.
• 4:59
  SPEAKER_00: So these stocks are massively under outperformed, right?
• 5:02
  SPEAKER_00: Which automatically makes them a bigger piece of the pie.
• 5:05
  SPEAKER_00: Now, here is where I think experience kicks in.
• 5:08
  SPEAKER_00: The last time we saw this kind of concentration was just before 2000.
• 5:14
  SPEAKER_00: Back then, the top 10 stocks accounted for 27% of the SP 500.
• 5:20
  SPEAKER_00: Today it's 39 to 54%.
• 5:24
  SPEAKER_00: I don't know where that gap's so big, but let's just say 39%, right?
• 5:28
  SPEAKER_00: So we're looking at a much, much bigger concentration.
• 5:31
  SPEAKER_00: And what happened when the dot-com bubble burst?
• 5:34
  SPEAKER_00: Well, we went down 49%.
• 5:36
  SPEAKER_00: Half the money gone, half your retirement gone.
• 5:39
  SPEAKER_00: So how do we get that?
• 5:40
  SPEAKER_00: It's actually quite simple.
• 5:42
  SPEAKER_00: Index funds use something called market cap waiting.
• 5:47
  SPEAKER_00: That means the bigger a company gets, the more of the index it has to buy.
• 5:52
  SPEAKER_00: It's automatic, it's mechanical.
• 5:53
  SPEAKER_00: There's no human saying, hey, maybe we have too much Apple.
• 5:56
  SPEAKER_00: No, no, no.
• 5:57
  SPEAKER_00: So here's how this works.
• 5:58
  SPEAKER_00: Number one, tech stocks outperform because they're genuinely good businesses with good profits.
• 6:05
  SPEAKER_00: Step two, as they grow, they become a bigger part of the index.
• 6:09
  SPEAKER_00: Step three, more money flows into index funds, and that money gets automatically allocated based on market cap.
• 6:18
  SPEAKER_00: So more money flows into the already giant tech stocks.
• 6:22
  SPEAKER_00: So it pushes their prices up even higher, making them an even bigger part of the index.
• 6:27
  SPEAKER_00: And then more money flows in, and therefore more money goes into those big stick 10 or 7 stocks, and therefore their percentage of the index gets bigger and it is just a recurring cycle.
• 6:38
  SPEAKER_00: It's a loop.
• 6:39
  SPEAKER_00: Now it works great until it doesn't.
• 6:42
  SPEAKER_00: Because the same mechanism that pushes prices up on the way, it'll accelerate them down on the way down.
• 6:49
  SPEAKER_00: It works the same way in both directions.
• 6:52
  SPEAKER_00: So if sentiment shifts and money starts flowing out of index funds, guess which stocks get hit the hardest?
• 6:59
  SPEAKER_00: The ones with the biggest weighting.
• 7:01
  SPEAKER_00: They lose most of the money.
• 7:02
  SPEAKER_00: Now we saw a little preview of that in 2022.
• 7:05
  SPEAKER_00: Do you anybody remember 2022?
• 7:08
  SPEAKER_00: The Magnificent 7.
• 7:10
  SPEAKER_00: So the top seven stocks, they lost 41% that year.
• 7:17
  SPEAKER_00: What about the SP?
• 7:18
  SPEAKER_00: Overall, they lost only 20%.
• 7:22
  SPEAKER_00: So the concentrated stocks fell twice as hard as the overall market.
• 7:26
  SPEAKER_00: All right, before we go even deeper into this rabbit hole, I want to show you some.
• 7:30
  SPEAKER_00: But only if you're serious about your money and your investing.
• 7:33
  SPEAKER_00: The way I learned how to manage my money wasn't by watching YouTube videos.
• 7:38
  SPEAKER_00: It was from the guy who sat next to me who employed me.
• 7:41
  SPEAKER_00: And then it was later from mentors who'd been working in investment banks and hedge funds for 10 years, 20 years, 30 years, 40 years, even 50 years.
• 7:50
  SPEAKER_00: And those guys have guided me along the way and they've given me the rules and the strategy and the confidence and the experience to, well, sort of know what I'm doing.
• 7:59
  SPEAKER_00: And it's allowed me to retire.
• 8:02
  SPEAKER_00: Now, if you are interested, and this week is a special reason to be interested, and I shall mention in a second, I'm going to give you access to my mentors, the same guys, same guys who worked in, you know, Goldman's and Deutscher and Basterns and all the big banks.
• 8:17
  SPEAKER_00: And there is a thing in the US called uh Black Friday, apparently.
• 8:22
  SPEAKER_00: And um, for that you tend to do sort of silly offers, right?
• 8:26
  SPEAKER_00: So we're doing a silly offer.
• 8:28
  SPEAKER_00: Um, this is the only time of the year that we do a silly offer.
• 8:31
  SPEAKER_00: We never discount because I always think we should spend every cent on delivering, which is what we do.
• 8:38
  SPEAKER_00: But we're doing it anyway because you guys have convinced me to do it.
• 8:41
  SPEAKER_00: So if you want to book a call with my team, it's a free strategy call.
• 8:45
  SPEAKER_00: They'll walk you through exactly how the program works, how the mentoring works, what you'd learn, how it functions, what it costs and everything else, and what that massive uh Black Friday offer is, then go to FelixFriends.org slash freedom.
• 8:59
  SPEAKER_00: So my hope for you is that it'll help you to get to your freedom.
• 9:02
  SPEAKER_00: Felixfriends.org slash freedom.
• 9:03
  SPEAKER_00: Link is also down below and book a free call, zero risk.
• 9:06
  SPEAKER_00: We don't pressure people, we don't push people, we can't train everybody because we teach one-on-one.
• 9:10
  SPEAKER_00: So it's really a question of just having that conversation.
• 9:13
  SPEAKER_00: Is it the right fit for you?
• 9:15
  SPEAKER_00: And if you want to do that, go to the link down below, feed-friends.org slash freedom.
• 9:18
  SPEAKER_00: Now let's talk about something most investors have no idea about.
• 9:21
  SPEAKER_00: When you own an index fund, you don't directly own the stocks.
• 9:25
  SPEAKER_00: The fund company owns them on your behalf, and there are three companies that dominate this space.
• 9:33
  SPEAKER_00: There is BlackRock, there is Vanguard, and there is State Street.
• 9:38
  SPEAKER_00: Together, these firms manage over$20 trillion in assets.
• 9:43
  SPEAKER_00: To put that in perspective, that's larger than the entire GDP of China.
• 9:48
  SPEAKER_00: It's pretty pretty big money.
• 9:49
  SPEAKER_00: Here's what's wild BlackRock and Vanguard are among the top three shareholders in 100% of the SP 500 companies.
• 10:00
  SPEAKER_00: Every single one.
• 10:01
  SPEAKER_00: In 84% of SP 500 companies, one or both of them is the largest shareholder.
• 10:07
  SPEAKER_00: So let me give you some examples.
• 10:09
  SPEAKER_00: Apple, BlackRock, Vanguard, and State Street own they own something like 19% of Apple.
• 10:16
  SPEAKER_00: Microsoft, they own about 16% of that.
• 10:19
  SPEAKER_00: That's$576 billion in Microsoft stock, right?
• 10:23
  SPEAKER_00: Nvidia, they own about 20% of Nvidia.
• 10:26
  SPEAKER_00: And this pattern repeats across the entire market.
• 10:29
  SPEAKER_00: Now you might be thinking, so what?
• 10:31
  SPEAKER_00: They're just passive investors holding index funds.
• 10:34
  SPEAKER_00: And that's partially true.
• 10:35
  SPEAKER_00: But here is where it gets concerning.
• 10:37
  SPEAKER_00: When you own a 5 to 8% of a company, you have massive influence.
• 10:42
  SPEAKER_00: You get private meetings with executives, you influence board decisions, you vote on major corporate actions.
• 10:48
  SPEAKER_00: And when the same three firms own significant stakes in all the major companies in an industry, well, it raises some questions.
• 10:57
  SPEAKER_00: In fact, this got so concerning that this very year, just a few months ago, the Department of Justice and the FTC filed their first ever formal statement in a federal court about the antitrust implications of these setups.
• 11:14
  SPEAKER_00: The case is Texas versus BlackRock, it's a big deal.
• 11:17
  SPEAKER_00: The allegation that BlackRock, Vanguard, and State Street used their stakes, which ranged from 24 to 34% in these companies, coal companies in this case, to coordinate output reductions, basically using their shareholder power to get competing companies to produce less.
• 11:40
  SPEAKER_00: Basically using their shareholder power to get competing companies to produce less, which drives up prices of, in this case, coal.
• 11:48
  SPEAKER_00: It's a violation of the Sherman Antitrust Act.
• 11:51
  SPEAKER_00: What the Department of Justice says is, and here's a direct quote, American consumers suffer when institutional asset managers use shareholdings and competing companies to orchestrate output reduction.
• 12:06
  SPEAKER_00: We will not hesitate to stand up against powerful financial firms that use Americans' retirement savings to harm competition under the guise of ESG.
• 12:17
  SPEAKER_00: That's the Department of Justice saying these passive investors might not be so passive after all.
• 12:24
  SPEAKER_00: And this concentration, it's accelerated.
• 12:27
  SPEAKER_00: The big three shareholdings of major companies have increased by 30% since 2015.
• 12:33
  SPEAKER_00: They now own over 18% of the dirty dozen oil and gas firms.
• 12:38
  SPEAKER_00: They're major shareholders in 88 to 95% of SP 500 companies, and it's getting some political heat.
• 12:46
  SPEAKER_00: Senator Bernie Sanders, and look, I don't agree with Bernie in all that much, but he called this orchestration an oligarchy that threatens democracy.
• 12:58
  SPEAKER_00: He's advocating for breaking up these firms or imposing ownership limits.
• 13:04
  SPEAKER_00: And I'm not saying necessarily the right solution, but I actually think he's on the right path there.
• 13:09
  SPEAKER_00: But the fact that we're even having this conversation tells you how concentrated ownership has become.
• 13:16
  SPEAKER_00: Here's why this matters to you.
• 13:18
  SPEAKER_00: As an index fund investor, and you all are, basically, you've got any kind of retirement fund or something, an index fund investor.
• 13:24
  SPEAKER_00: When you buy an index fund, you're not just buying stocks, you're giving your voting rights to these massive asset managers.
• 13:30
  SPEAKER_00: They vote on your behalf, they engage with management on your behalf.
• 13:35
  SPEAKER_00: And increasingly, regulators are questioning whether they're using that power in ways that might not be in your best interest.
• 13:43
  SPEAKER_00: So the Department of Justice made it clear: just because you're a passive investor doesn't mean you get a free pass to coordinate anti-competitive behavior.
• 13:51
  SPEAKER_00: And if these firms face regulatory crackdowns, that could also impact your index fund holdings.
• 13:59
  SPEAKER_00: Now let's talk about something that sounds boring, but it's actually critical.
• 14:03
  SPEAKER_00: Price discovery.
• 14:05
  SPEAKER_00: In simple terms, price discovery is how the market figures out what a stock is actually worth.
• 14:10
  SPEAKER_00: In a healthy market, you have thousands of investors analyzing companies, looking at earnings, comparing valuations, and then they're making buy and sell decisions based on that fundamental decision, right?
• 14:22
  SPEAKER_00: So some think Apple is overvalued and they sell, others think it's undervalued and they buy.
• 14:27
  SPEAKER_00: This constant push and pull of informed buyers and sellers is what creates efficient price.
• 14:33
  SPEAKER_00: But here is what happens with passive investing.
• 14:36
  SPEAKER_00: Index funds don't care about valuation.
• 14:38
  SPEAKER_00: They don't care about profits, they don't care about competitive positioning.
• 14:43
  SPEAKER_00: They buy stocks simply because they are in the index.
• 14:47
  SPEAKER_00: If a company gets added to the S P 500, index funds, index funds have to buy it, regardless of price.
• 14:55
  SPEAKER_00: If a company grows and becomes a bigger part of the index, funds automatically buy more, regardless of whether it's overvalued.
• 15:03
  SPEAKER_00: This is what's called blind buying.
• 15:06
  SPEAKER_00: Now, if passive investing was a small part of the market, this wouldn't really matter much.
• 15:10
  SPEAKER_00: But it's a massive part of investing.
• 15:14
  SPEAKER_00: As of me recording this, passive investing now represents 51% of all fund assets.
• 15:23
  SPEAKER_00: It was only 19% in 2010.
• 15:26
  SPEAKER_00: So in just 15 years, passive went from a minority strategy to the majority of the market.
• 15:32
  SPEAKER_00: Last year,$2 trillion flowed into index funds.
• 15:37
  SPEAKER_00: And here's what concerns me.
• 15:40
  SPEAKER_00: We've crossed the 50% threshold.
• 15:42
  SPEAKER_00: And passive investing was 20% or 30% of the market.
• 15:45
  SPEAKER_00: There was still plenty of active price discovery.
• 15:48
  SPEAKER_00: But now that it's over 50%, we're in uncharted territory.
• 15:52
  SPEAKER_00: More than half of fund assets are now being allocated with zero regard for fundamentals.
• 15:59
  SPEAKER_00: That's a fundamental shift in how markets work.
• 16:03
  SPEAKER_00: Now I'm not just speculating here.
• 16:05
  SPEAKER_00: There is actual academic research on this.
• 16:08
  SPEAKER_00: A 2025 study by research affiliates in Duke University found that passive investment explains a 20% increase in market risk over the last four decades.
• 16:20
  SPEAKER_00: How?
• 16:20
  SPEAKER_00: Stocks are more correlated than ever.
• 16:23
  SPEAKER_00: Now what's correlation?
• 16:24
  SPEAKER_00: Let's break that down into plain English.
• 16:26
  SPEAKER_00: Correlation is a strange statistical word.
• 16:29
  SPEAKER_00: It measures how much stocks move together.
• 16:32
  SPEAKER_00: In a healthy market, stocks move somewhat independently based on their fundamentals.
• 16:37
  SPEAKER_00: Apple might go up, well, ExxonMobil might go down because they're in different industries with different drivers.
• 16:44
  SPEAKER_00: But when passive flows dominate everything, stocks start moving together up and down.
• 16:51
  SPEAKER_00: Because index funds buy all the stocks in the industry in the index at the same time.
• 16:57
  SPEAKER_00: Money flows out, it sells all the stocks at the same time.
• 17:00
  SPEAKER_00: So it creates this artificial correlation connection that has nothing to do with the underlying business.
• 17:07
  SPEAKER_00: And this undermines the entire point of diversification.
• 17:11
  SPEAKER_00: You buy an index fund thinking you're spreading your risk across 500 companies, but if passive flows are making all those companies move together, you're not actually getting any diversification, at least not a lot.
• 17:23
  SPEAKER_00: And here is where this gets dangerous.
• 17:25
  SPEAKER_00: During market crises, like 2008 or 2020 COVID crash, this synchronous, this synchronous movement gets even worse.
• 17:36
  SPEAKER_00: Research shows that passive holdings amplified volatility, which means gone down, and reduced liquidity during both of those events.
• 17:46
  SPEAKER_00: So when everyone's trying to sell their index funds at the same time, all 500 stocks get hit simultaneously.
• 17:52
  SPEAKER_00: There's no discrimination between strong companies and weak companies.
• 17:55
  SPEAKER_00: Everything just gets sold.
• 17:57
  SPEAKER_00: And the way I like to picture this is imagine an overcrowded theater.
• 18:01
  SPEAKER_00: Imagine you're in a movie theater with 500 people, everything is fine, everyone's sitting on the stairs and everywhere, but it's fine.
• 18:07
  SPEAKER_00: And then somebody yells, fire, right?
• 18:10
  SPEAKER_00: So suddenly everybody rushes for the exits at the same time.
• 18:13
  SPEAKER_00: But there are only two doors.
• 18:15
  SPEAKER_00: Chaos ensues, right?
• 18:17
  SPEAKER_00: This applies to index funds.
• 18:20
  SPEAKER_00: Right now, money is flowing in, right?
• 18:23
  SPEAKER_00: $2 trillion just last year.
• 18:26
  SPEAKER_00: When money flows in, index funds buy stocks, it pushes up everything, everybody is happy.
• 18:31
  SPEAKER_00: But what happens when the flow reverses?
• 18:33
  SPEAKER_00: What happens when investors get scared and start pulling money out of index funds?
• 18:38
  SPEAKER_00: Where's the problem?
• 18:39
  SPEAKER_00: Index funds have to sell.
• 18:41
  SPEAKER_00: They have no option.
• 18:42
  SPEAKER_00: They have to sell.
• 18:43
  SPEAKER_00: And remember, 51% of fund assets are now in these index funds.
• 18:48
  SPEAKER_00: It's a very significant part of money that tries to exit at the same time, and you get this cascade.
• 18:53
  SPEAKER_00: So investors panic, they sell index funds.
• 18:57
  SPEAKER_00: Funds are forced to sell index funds, so stock prices drop.
• 19:01
  SPEAKER_00: Therefore, you've got more panic, and therefore more people sell.
• 19:04
  SPEAKER_00: And what then happens?
• 19:06
  SPEAKER_00: Well, you create a loop.
• 19:08
  SPEAKER_00: Now the concentrated stocks, the top guys, they get hit twice as hard.
• 19:13
  SPEAKER_00: 2022, Max 7 fell 41%, SP fell 20%.
• 19:18
  SPEAKER_00: So there are therefore some lessons from this about what we may or may not want to be holding.
• 19:24
  SPEAKER_00: But there are also tremendous opportunities if you look at it this way, because the good companies are going to get sold just because of the trampling, the panic, the fear.
• 19:33
  SPEAKER_00: So it's going to be some serious opportunity in a drawdown, right?
• 19:38
  SPEAKER_00: Now the question you have to ask yourself is you're going to have a cool head when this happens?
• 19:42
  SPEAKER_00: Well, probably not.
• 19:44
  SPEAKER_00: Most of us don't.
• 19:45
  SPEAKER_00: So what would I do in that scenario?
• 19:46
  SPEAKER_00: I'd hop on a call with one of my mentors and say, I think these are opportunities, what do you think?
• 19:50
  SPEAKER_00: And he'd tell me a story about 1992, which I don't remember because I was 12 years old, but he managed a couple of hundred million dollars that day and remembers it.
• 19:58
  SPEAKER_00: And that's what would make me a smarter investor.
• 20:01
  SPEAKER_00: So that kind of guidance, if you want to get that, well, book yourself a free strategy call to start with.
• 20:07
  SPEAKER_00: A, we could potentially lock in our crazy Black Friday offer.
• 20:11
  SPEAKER_00: And secondly, you might get mentoring from my mentors, Wall Street guys, real goats, you've done this for many decades longer than I have.
• 20:21
  SPEAKER_00: So FelixFence.org slash freedom is where you book yourself that call.
• 20:26
  SPEAKER_00: Now, it's not all doom and gloom, right?
• 20:29
  SPEAKER_00: So I've spent a fair few minutes here telling you about the risks, because I think it's important to understand this.
• 20:35
  SPEAKER_00: But I'm not here to fear monger.
• 20:36
  SPEAKER_00: So I'm going to give you the full picture, right?
• 20:39
  SPEAKER_00: The profits of these companies that we're talking about, the top seven, they are real.
• 20:44
  SPEAKER_00: Passive investing is huge in terms of funds, but in part terms of the overall market cap, it is still right now about 20, 20, or 25% or so of the market cap.
• 20:58
  SPEAKER_00: So the active managers, the pension funds, the insiders still own a very large chunk of the market.
• 21:03
  SPEAKER_00: So there is still some price discovery happening.
• 21:06
  SPEAKER_00: But what I'm saying to you is becoming less and less and less and less.
• 21:09
  SPEAKER_00: And retail investors like you and me tend to be the ones that panic.
• 21:14
  SPEAKER_00: And we often hold most, if not all, of our money in these ETFs.
• 21:18
  SPEAKER_00: And we are the more volatile bit.
• 21:20
  SPEAKER_00: We're like the spark in the tinderbox, right?
• 21:23
  SPEAKER_00: And hedge funds realize that.
• 21:26
  SPEAKER_00: They usually have better data than you.
• 21:28
  SPEAKER_00: So they're building literally anti-crowd portfolios.
• 21:31
  SPEAKER_00: Like, because they know what's going to happen if the ETFs all sell because you'll panic, and therefore they're kind of like running the other way.
• 21:38
  SPEAKER_00: Now, some people would say that's self-correcting and that's good.
• 21:41
  SPEAKER_00: Uh, I would sort of say that's insanely unfair because they understand something that you don't, which is why I decided to make this rather lengthy and in-depth video.
• 21:48
  SPEAKER_00: And I get this is a lot of information, right?
• 21:50
  SPEAKER_00: So there's a there's a workbook to this.
• 21:52
  SPEAKER_00: Take advantage of that to really make this sink in.
• 21:56
  SPEAKER_00: So let me give you some action steps because I promised you that.
• 21:59
  SPEAKER_00: Check your concentration.
• 22:01
  SPEAKER_00: How much is in SP funds right now, right?
• 22:03
  SPEAKER_00: Especially if you're near retirement, that is can be riskier than you think.
• 22:08
  SPEAKER_00: Now, what are the alternatives?
• 22:09
  SPEAKER_00: Well, you can be in equal weight funds, so there are ETFs that track the SP and they give each stock the same amount of money.
• 22:17
  SPEAKER_00: That'll give you more diversification, but it'll give you lower upside.
• 22:21
  SPEAKER_00: Because by the nature of the index funds buying a lot of the top stocks, those top stocks tend to outperform.
• 22:27
  SPEAKER_00: So you could take the counter-argument and do the opposite.
• 22:31
  SPEAKER_00: And I actually do that.
• 22:32
  SPEAKER_00: I buy something called the SP 100, because, well, at least in the good times, that outperforms.
• 22:38
  SPEAKER_00: Now, in the bad times, it'll underperform.
• 22:40
  SPEAKER_00: So bear that in mind.
• 22:41
  SPEAKER_00: That could give you more risk.
• 22:42
  SPEAKER_00: Now, a lot of people say diversified beyond US large caps.
• 22:46
  SPEAKER_00: Small caps, international stocks, emerging markets.
• 22:49
  SPEAKER_00: So just a few words on that from my opinion, not financial advice.
• 22:52
  SPEAKER_00: Small caps are volatile.
• 22:55
  SPEAKER_00: There are companies that get hit first with the economy tanks.
• 22:58
  SPEAKER_00: They haven't got access to, well, bailouts, they haven't got access to shareholders who will give them more and more money.
• 23:05
  SPEAKER_00: So they are a lot more risky, in my humble opinion.
• 23:08
  SPEAKER_00: They get hit by interest rates first and so on.
• 23:10
  SPEAKER_00: They've outperformed in the last, I don't know how many years, but quite a few.
• 23:15
  SPEAKER_00: International stocks, you've got to ask yourself, do you understand them?
• 23:18
  SPEAKER_00: Do you understand the country, the laws, the regulation, the taxes?
• 23:21
  SPEAKER_00: Yes or no?
• 23:22
  SPEAKER_00: The currencies, yes or no?
• 23:24
  SPEAKER_00: And then emerging markets is just another word for um risky international.
• 23:28
  SPEAKER_00: So those are countries with lesser developed economies, potentially more opportunity, but do you understand it?
• 23:34
  SPEAKER_00: Do you understand how those function?
• 23:36
  SPEAKER_00: You understand the regulation, the risks, the governing structures, corruption issues, you know, all that stuff.
• 23:41
  SPEAKER_00: Do you get that?
• 23:43
  SPEAKER_00: So people say that diversifies you.
• 23:45
  SPEAKER_00: I often say, well, that just brings you more risk.
• 23:47
  SPEAKER_00: So I'm not a personally not a huge fan of that basket.
• 23:50
  SPEAKER_00: Now, the don't panic basket number four, definitely, I mean, they have built wealth for millions.
• 23:57
  SPEAKER_00: They'll probably continue to do that, but I want you to be aware of the risk.
• 24:00
  SPEAKER_00: So don't just run for the door, but understand what you own.
• 24:04
  SPEAKER_00: And if you want to build a truly diversified portfolio, well, you can learn how to pick some individual stocks that are not part of this, right?
• 24:12
  SPEAKER_00: So what's one of one of my biggest winners the last couple of weeks is Victoria's Secret.
• 24:17
  SPEAKER_00: Yes, it's because of the long legs.
• 24:19
  SPEAKER_00: No, it's just a business that is from Wall Street's rules in the face of recovery.
• 24:23
  SPEAKER_00: I'm not telling you to buy it, right?
• 24:24
  SPEAKER_00: United Health has done quite well, for example, or that's a fairly big SP stock.
• 24:28
  SPEAKER_00: So but we can be in things that are not in there, that are not sexy, that are not talked about, and that can still make us a lot of money.
• 24:34
  SPEAKER_00: And you want to learn that, or you're thinking about learning that, well, have a chat with us, FelixFruns.org slash freedom, book a free call, talk to my team, ask them all the tough questions, and potentially join our mentorship programs, learn from guys who've literally done this for decades for investment banks or hedge funds, the people that I admire and look up to.
• 24:55
  SPEAKER_00: So, summary concentration risk is real.
• 24:58
  SPEAKER_00: It's double of 2,000 levels.
• 25:00
  SPEAKER_00: Uh, concentration works all both ways, up and down.
• 25:04
  SPEAKER_00: Uh, we didn't talk about the hidden costs here so much because I thought that was a distractor, so let's ignore that for a moment.
• 25:09
  SPEAKER_00: But being informed, being educated, being skilled is your best defense.
• 25:14
  SPEAKER_00: So, as I say very smartly here, blind faith in any strategy is dangerous.
• 25:19
  SPEAKER_00: If you got some value out of this, you know what to do.
• 25:22
  SPEAKER_00: Book a call, FelixFrence.org slash freedom, and share this with a friend who might benefit from it too.
• 25:28
  SPEAKER_00: I wish you all the best.