Wes Johnson notes that although major U.S. indexes have shown positive performance recently, a significant portion of those returns has been driven by a relatively small number of large-cap companies. The result: broad headlines about market strength mask underlying risk. 

Johnson notes that when markets get this “top-heavy,” you’re not just chasing growth — you’re chasing valuations. He emphasizes that markets don’t immediately revert at “fair value,” but extended valuations raise the probability of adverse outcomes.

Why This Matters to Investors
For investors working toward long-term goals, this is more than theory. Johnson explains that many individual portfolios are diversified across asset classes—such as small- and mid-cap stocks, bonds, and international holdings—which may differ from the composition of major market indexes. As a result, performance can vary from indexes like the S&P 500 during periods when those indexes are driven primarily by one segment of the market.

In other words: if your portfolio looks more conservative than the big indexes, you might feel left behind — but that may be a feature, not a bug.

Look Beyond U.S. Large Caps
One of the key tactical take-aways of the interview: consider widening your lens beyond U.S. large-cap growth stocks. Johnson emphasizes the value of widening your lens beyond U.S. large-cap growth stocks.

Valuations in many developed and emerging markets are currently lower than those in the U.S., which may provide different risk and return characteristics for investors. For those seeking broader diversification, allocating across global markets can help reduce reliance on any single segment of the equity landscape and provide exposure to areas that may be priced differently than large U.S. companies.

Risk Isn’t Just About Markets Pulling Back
It’s easy to assume the risk here is a broad market stumble. But Johnson emphasizes deeper structural warnings:

• Overreliance on mega-cap stocks means less diversification and more exposure to idiosyncratic risk.

• If earnings growth fails to keep pace with valuations, the market may recalibrate. 

• Investors may feel complacent amid strong returns — but hindsight shows that periods of elevated valuations often precede more turbulent stretches. 

Johnson underscores that the priority isn’t timing a correction—it’s maintaining realistic assumptions and managing downside exposure.

From Insight to Action — What Investors Should Consider
Here are some actionable considerations based on the interview:

1. Review your portfolio’s exposure to large-cap U.S. growth. If a large portion of your equity allocation is tied to the same handful of mega-caps, you may be accepting concentration risk even if you don’t realize it.

2. Expand diversification — especially internationally. Markets beyond the U.S. may offer broader opportunities and more reasonable valuations.

3. Align expectations with reality. A market that’s richly valued today may not deliver the same kinds of returns as in cheaper decades. Guard your return assumptions accordingly.

4. Stay true to your long-term plan. It’s tempting to chase headline returns, but a portfolio built with sound asset allocation, risk tolerance and time horizon is more likely to protect what matters most.

5. Work with a fiduciary advisor who can challenge the consensus. At ACT Advisors, Wes Johnson works to anticipate risks, question optimism, and helps clients to navigate the less-obvious pitfalls.

Final Thoughts
As the interview underscores: strong markets are great — until they’re not. The fact that valuations are elevated doesn’t guarantee a crash, but it does warrant a defensive shift, especially for investors targeting preservation and steady long-term growth.
For investors working with ACT Advisors, this means a disciplined review of portfolio posture, a willingness to look beyond the obvious, and a readiness to protect what matters most.