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The Perilous Power of One Stock

Matthew Allgood |

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Nvidia has had such a dominant impact on the S&P 500 that if you removed it from the index, U.S. markets would be underperforming their European counterparts since the 2022 bottom. This single stock has driven much of the index’s recent gains, but disruptions like the developments in AI with DeepSeek have now sent Nvidia into a bear market, weighing down the broader index. 

This highlights the risks of overreliance on one company and the potential vulnerability it creates for investors. Our RiskFirst® approach focuses on a balanced approach—diversifying across sectors and regions to mitigate the impact of any one stock or trend on your portfolio's performance. 

The Perilous Power of One Stock

A graph of stock market trends AI-generated content may be incorrect.

Sources: Bloomberg, Redwood. Data as of 1/30/25.

Regards,

Allgood Financial

Disclosure: This piece is for informational purposes only and contains opinions of Redwood that should not be construed as facts. Information provided herein from third parties is obtained from sources believed to be reliable, but no representation or warranty is made as to its accuracy or completeness. Charts and graphs are for illustrative purposes only. Discussion of any specific strategy is not intended as a guarantee of profit or loss. Past performance is not a guarantee of future results. The objectives mentioned are not guaranteed to be achieved. Investors cannot invest directly in any of the indices mentioned above. Diversification of asset class is not a guarantee against loss. RiskFirst® is a registered trademark of Redwood Investment Management, LLC.

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