Is the Stock Market Rigged? Yes - In YOUR favor!

By J.R. Robinson, Financia Planner (February 2026)

The Myth: “Too Much in a Few Giant Stocks”

Over the past couple of years much has been made about how the S&P 500 Index has become over-concentrated in just a handful of large cap technology companies.  Specifically, the “Elite Eight” (NVIDIA, Alphabet, Apple, Microsoft, Amazon, Meta, Broadcom, and Tesla) each sport total market capitalizations (defined as # of shares outstanding times current market price per share) of more than $1 trillion. Combined, these companies account for 35-40% of the total market value of the entire S&P 500 Index.

This has led to much handwringing and fretting in the financial news media about whether consumers should seek broader diversification elsewhere, or (gasp) consider active portfolio management instead of “buying the market.”  Jason Zweig tackled this fear in his February 13th (2026) Wall Street Journal “Intelligent Investor” article, “The Big Scary Myth Stalking the Stock Market.” He argues that having more than 30% of one’s portfolio in seven or eight companies isn’t as terrifying as it sounds because those companies earned their big weights by delivering years of strong growth, profits, and stock performance. In other words, the index did not arbitrarily bet on them; it simply added more of what was/is working well. 

How Market‑Cap Weighting “Riggs” the Game

And that is the key feature of the market‑cap‑weighted structure of the S&P 500 Index -winners naturally get a larger slice of your money as their share prices rise, while the losers naturally shrink in importance as their prices fall.  Unlike hiring a money manager who you cross your fingers and hope will pick winning stocks, if you buy the index, you don’t have to predict which stocks will win; the structure does the heavy lifting for you when it rebalances. 

Think of it like a garden that automatically gives more sunlight and water to the healthiest plants, while letting the weak ones naturally wither into tiny corners of the plot. You’re not hand‑picking winners; you’re letting the market’s collective judgment decide whose share of your portfolio grows.

The S&P 500 Index is formally rebalanced on the third Friday of March,  June, September, and December.  At these dates, S&P Global (the official keeper of the index) adjusts company weights based on market capitalization, ensuring the index accurately reflects the 500 largest U.S. companies and removing firms that no longer qualify.  The major index mutual funds and ETFs that mirror the S&P 500 follow the same schedule.

The Lineup Constantly Changes: A 35‑Year View

To see how this helps you, look at how the biggest companies in the S&P 500 have changed over time.

Source:  FinHacker

Today’s giants were often tiny or nonexistent 20 or 30 years ago, and yesterday’s seemingly invincible masters of the universe (e.g., G.E., IBM, and Intel) are mere shadows of their former corporate selves today. Yet through all this changing of the guard, the S&P 500 Index has continued its inexorable march higher, decade after decade.  The Index never “decided” which companies would win; it just owned everything and let success push companies upward and failure push others downward.

If you’d tried to pick the future winners in 1990 or 2000, you probably would have made some painful mistakes. An S&P 500 index fund avoided that problem by owning them all and letting market‑cap weighting slowly swap old champions for new ones.

What This Means for Individual Investors Today

Ever since index funds emerged on the investment landscape in the 1970s, there has been a steady stream of often self-serving naysayers urging consumers not to settle for the “average” returns of index funds.  Yet over the past 50 years, the number of active portfolio managers who have managed to outperform the index consistently over time is far smaller than the number who claim they do. While it is true that every year there are many funds that outperform the benchmark index, it is generally not the same funds year after year. 

As Zweig says in his article, “Concentration risk” is the newest in this long line of marketing blitzes. Most of the so-called Magnificent Seven—Alphabet, Amazon.com, Apple, Meta Platforms, Microsoft, Nvidia and Tesla—didn’t even outperform the S&P in 2025, and so far this year they are all trailing the index. But that hasn’t stifled the scary talk about how dangerous they are.” However, if you think about it, the advice of taking risk-off by selling concentrated positions in the index is essentially telling investors to sell their winners and buy the losers.  Does that sound like sound investment advice to you?  Historically, it hasn’t been.

I roll my eyes whenever I see a Reddit rant by an investor claiming the stock market is rigged because he just blew up his Robinhood account day trading.  Per the discussion above, the market IS rigged – but in your favor rather than against you.  Unfortunately, the path to building wealth is not a sexy one or one that will garner you thousands of followers on Tik Tok. In 35+ years of investing, I honestly have never met anyone who built significant wealth by trading their brains out, but I know many who have built a nice pile just by buying and holding a boring  old index fund (or ETF).

John H. Robinson is the founder of Financial Planning Hawaii and Fee-Only Planning Hawaii and a co-founder of retirement simulation software, Nest Egg Guru.