JPMorgan is urging investors to rethink crowded bets as markets head into 2026, warning that concentration risk is quietly building beneath strong headline returns.
In a new Fox Business interview, David Kelly, chief global strategist at JPMorgan Asset Management, says years of gains have left many portfolios heavily tilted toward US mega-cap technology stocks.
Kelly says the risk is not an immediate crash, but a threat tied to excess concentration.
“Rebalance, because I think the rebalance is a tax-smart way, but really pay attention to it, because I think a lot of people are a lot richer than they were a few years ago, but they are very concentrated in these mega-cap tech stocks in the US equity market.”
He warns that while the timing is unknowable, the location of potential trouble is not.
“And sooner or later, something will go wrong. You know not the day nor the hour, but you do know where it’s going to happen, and it’s going to happen in those big tech stocks and in other areas of a lot of speculation.”
Kelly argues that the prudent response is not market timing, but diversification while gains are still intact.
“So you want to get a more balanced portfolio. That’s really the New Year’s resolution. Get balanced for 2026.”
Last week, Wall Street veteran Ed Yardeni abruptly trimmed Magnificent 7 stocks to underweight following a strong 15-year run. The investor warned that Mag 7 names are now in the midst of a strong competition among themselves, as well as Chinese firms.
“The profit margins have been awfully high for the Magnificent 7. That usually invites a lot of competition, and that is exactly what is happening.”
Yardeni added that investors should rebalance their portfolio and look at S&P 500 firms that will likely benefit from the productivity gains coming from the adoption of AI.
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