In August, Apollo CEO Marc Rowan added his voice to the growing chorus of investment leaders calling for a reset in how we think about public and private markets. “We had this notion 40 years ago that private was risky and public was safe,” he told CNBC. “What if that’s just fundamentally wrong?”^1^
It’s a line we’ve now heard in one form or another from BlackRock’s Larry Fink, J.P. Morgan’s Jamie Dimon, and others.^2^ The refrain may be getting old, but the underlying point is worth considering.
The Concentration Problem
One of the key developments Marc Rowan, Jamie Dimon, and others point to is how much thinner and narrower public markets have become. The headline number is familiar: roughly 8,000 public companies in the 1990s, and only about 4,000 today.^3^ But even within that smaller pool, concentration has climbed to levels that have many investors worried.
J.P. Morgan estimates the top 10 U.S. stocks now make up nearly 30 percent of total market capitalization. Within the S&P 500, those same names account for about 40 percent of the index. That’s the steepest rise in stock market concentration in 60 years.^4^
In 2023, the “Magnificent Seven” — Apple, Nvidia, Microsoft, Amazon, Alphabet, Meta, and Tesla — drove more than half the total gains of the S&P 500. In other words, when investors bought index funds last year, over half of their returns hinged on just seven companies.^5^
The Small-Cap Bear Market
The S&P 500 isn’t the only corner of public markets showing strain. Small caps once helped some investors balance their portfolios, offering more domestic exposure and the promise of a potential size premium. Lately, they’ve been stuck in the wilderness.
Morningstar data shows the U.S. small-cap index dropped 23 percent from its November 2024 high through April 2025. Even more striking: you have to go back to 2016 to find the last year small caps outperformed the broad market. They’ve trailed in expansions and recessions, in both rising- and falling-rate environments.^6^
There are plenty of reasons, but one is the rise of private markets. Many younger, high-growth companies are choosing to stay private longer, sidestepping the costs and scrutiny of public listing. That leaves less oxygen in the small-cap universe — and no clear timeline for when that dynamic might shift.^7^
Public Markets and Their Limits
When Marc Rowan asks whether our old notion about the safety of public markets was “just wrong,” the answer is probably somewhere in the middle.
Public equities weren’t miscast for most of the past century; they did serve as the relatively stable anchor of many balanced portfolios. But in 2025, with concentration at the top, weakness at the bottom, and private markets filling more of the capital gap, that assumption may look far less reliable than it once did.
If the S&P 500 isn’t a diversification play anymore, what is? Many investors are considering assets like (private equity), (private credit), and (commercial real estate). Like public markets, these assets carry real and unique risks — but historically they’ve shown little or no correlation with stocks.^8^* One trade-off worth noting is liquidity. Public markets provide daily pricing and the flexibility to enter or exit positions at will, while private markets often require investors to lock up capital for years. Some newer fund structures are starting to ease those limits with partial liquidity, but the gap remains an important consideration for investors.^9^
As always, it’s important to note that private market investments carry a high level of risk, and investors should evaluate these opportunities carefully to ensure they align with their risk tolerance
and financial goals. This information is not a comprehensive comparison of public versus private markets, but a reminder to approach both types of investments with thorough due diligence.
You may be tired of hearing Wall Street leaders preach about (private markets). Fair enough. But as markets undergo one of their most significant shifts in decades, these data are worth paying attention to.
{{ Private market investments are, by nature, generally less volatile than the stock market. This lack of volatility does not necessarily translate to private real estate not fluctuating in or losing value. Further, the value of private real estate investments will fluctuate, and the value of real estate often lags behind general market conditions. }}
