Market concentration has reached its limit. Are some market mechanisms changing?

By some standards, concentrations now reach na American The last recorded extreme stock market event was about a hundred years ago. flightThis reflects what is happening in the corporate sector and in individual commodity markets. ServeThere are some clarifications on this today, including considerations on changes in market mechanisms.

1. Two relevant types of market concentration: The chart below from Goldman Sachs shows the weights of the top ten using a light blue curve. company The market is dark. blue Describe the maximum weight action (relative to the smallest group). His main point is obviously that the current concentrations are extreme, and similar conditions have only been recorded about a hundred years ago. flight:

Source: X

Market concentration is discussed in two contexts. The first, depicted graphically, is the share of one or a few traded companies in the total capitalization of the stock market. The second, more often mentioned in economics, refers to the share of one or a few companies in the market for (their) goods or products. Serve.

The two can be closely related – if in (American） economy growing up The company’s market power in its market, so it is no surprise that Will grow and the share of these company About the total market value of the stock market. Not surprisingly, therefore, the situation described by the chart is closely related to the consideration of whether they have certain abilities. company Too dominant in its market.

2. Fast up and fast down: Apart from the current extremes, we can also notice that those periods of high concentration are basically without exception very similar – a rapid onset and an equally rapid decline. If I simplify it a lot, for the big cycles we are talking about five to ten years up and five to ten years down to the next bottom. If this pattern continues and we are at the top now, it will take five to ten times let Go to the other extreme.

Of course, this could happen in two ways, or rather a mixture of several ways – either way company Dominant companies are losing capital that they would otherwise have company On the other hand, now much smaller companies are dramatically increasing their capital. In both cases, then in commodities and Serve The current market position of the giants has certainly been diluted. By NVIDIA Take five to ten letbefore her competitors completely catch up with her Technical lead?

By such reasoning we arrive at the fact that the present situation is exceptional even at the level and level of development. invest Do new technologyincluding various variations AIThe usual development pattern seems to have a new breakthrough technology Imaginary new bushes emerge company and a new ecosystem. and company Have mature or even rigid business models and companies culture They often couldn’t get on the new trains on time. It was too much for what he could do.

AI and related technology But they represent a turning point—at least for now, they are the main movers here company Established rather than emerging. This phenomenon is again directly reflected in the developments depicted in the chart. Ultimately, much depends on the definition of “new”. technology. if AI and company. We will consider this as an extension technology Sometime before the age of twenty flightthe image changes. After all, we are talking about the fact that young people at that time company They are still reaping the harvest they started then.

For example Technical In progress railway It has its limitations and cannot be pulled further and further. technology The type of Internet, software, this extension can have a larger size. Then the “laws” about young and old are also changing companyThis is a theory. If it works, the current cycle shown in the chart may end up being different.

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