According to the Wisdom Financial app, Fidelity portfolio planner Chris Wong stated that as of mid-year, the market has been dominated by large-cap stocks for the past two years, with market breadth below long-term average levels. Although the market rally has broadened, if the market's lifecycle continues as expected, there is still a chance for further expansion. Given the high proportion of the 'Big Seven Tech Stocks' in the S&P 500 index, the popularity may have partially contributed to the phenomenon of market over-concentration.index fundsInvestors are relatively holding small and medium-sized stocks, so small and medium-sized stocks may benefit from the market's broadening.

Furthermore, when the Federal Reserve starts cutting interest rates, the stock market often performs well. With the rate-cutting cycle already underway, this means that stock prices may continue to strengthen. In an environment of rate cuts, areas outside of large growth stocks with relatively large market caps may perform better, such as value stocks and non-large-cap stocks.

Good valuation and profit prospects for small and medium-sized stocks.

Chris Wong mentioned that the valuation gap between small and medium-sized stocks and large-cap stocks has narrowed, even falling below long-term historical averages. There is room for the valuation of small and medium-sized stocks to rise, potentially catching up with large-cap stocks. One of the challenges facing small and medium-sized stocks (especially small-cap stocks) is the upcoming 'debt maturity wave' in the next five years. However, as the rate-cutting cycle becomes more certain, small and medium-sized stocks can refinance their debts. This will help reduce expenses and boost profits.

Investors may seek to invest in markets outside of the United States.

The seven major technology stocks have been performing strongly, indicating that some investors may be overly concentrated on the USA, growth stocks, and large-cap stocks. Therefore, by exploring other opportunities in the global market, it may be possible to effectively diversify risks. In addition, considering the strong fundamentals in Europe and the central bank's interest rate cuts, the current valuations of major consumer goods stocks in Europe are more attractive than their U.S. counterparts.

It is worth emphasizing that Europe has many attractive companies, many of which have business operations worldwide. In addition, these companies often generate revenue from multiple sources, making them an excellent way to invest in expanding markets such as India and China. Meanwhile, the outlook for the United Kingdom's stock market is healthier than in recent years. In addition to being undervalued, the combination of growth and income stocks on the UK stock market is attractive, offering investors many choices.

Furthermore, investors have overlooked Asia for some time. However, Asia's profit growth is strong, and stocks in the region are expected to be supported by various structural trends, including moderate inflation in Asia, indicating room for interest rate cuts. This is due to supportive fundamental factors, including less corporate and consumer borrowing, healthier current account balances, higher forex reserves, and lower USD-denominated debt.

China has shown preliminary signs of recovery, especially in exports and the manufacturing sector. The authorities have recently introduced stimulus measures, which may further support the recovery. Moreover, Chinese companies are gradually announcing increased dividend payouts and share buyback plans, showing a greater focus on shareholder returns.

Another factor that could drive market breadth expansion is earnings. Non-large-cap stocks have recently shown strong earnings performance, with many companies expected to achieve their first profit growth since the fourth quarter of 2022. In contrast, the earnings growth rate of large-cap stocks has declined compared to previous high growth rates.

Diversified investment opportunities have arrived.

Although technology stocks have been popular over the past two years, there are still parts of the global technology sector that some investors should not overlook. The recent uptrend has been mainly driven by a group of large-cap stocks focusing on the artificial intelligence (AI) theme, overshadowing countless industries that may present opportunities in the technology market.

Within the AI value chain, data infrastructure and information technology consulting firms are important components but are often underestimated. Investors also underestimate the long-term potential of software companies to monetize AI capabilities.

The market is overly obsessed with large technology stocks, leading to the neglect of small and medium-sized technology stocks, causing some small and medium-sized stocks to become potential targets.MergerSome traditional industries (such as manufacturing) are using technology to enhance internal operations and serve customers. However, the market has not yet considered these technology-driven transformations, providing investors with diversified investment opportunities.

Considering all the above factors, areas outside of large-cap stocks provide significant value for investors. Small and medium-sized companies around the world are poised to benefit from rate cuts. Dividend stocks are also supported by solid profits and valuations, offering sustainable and inflation-resistant total returns, not just in the US but also attracting dividend stocks in Europe, the United Kingdom, and Asia. Even in popular industries like technology, there are opportunities beyond hot topics and large-cap stocks.

Peter Lynch, former fund manager at Fidelity Investments, stated that when investing in the stock market, investors should diversify their investments, hold different types of funds, and invest in various styles of stocks, such as growth stocks and value stocks, as well as small-cap and large-cap stocks.

Growth stocks and the US stock market have become excessively concentrated. While continuing to capture market growth, investors can also consider diversifying their investments across different regions, industries, and broader stock sectors to manage risks in potentially uncertain environments.