We are in the middle of one of the most unusual stock market years in a long time. Indices are setting records worldwide, while some of the most respected asset managers, Berkshire Hathaway included, are lagging far behind. It’s a rare combination, and it has earned an international name: the big dispersion, or the great narrowing. Here’s what’s happening and why it’s worth paying attention to.
Berkshire Hathaway trailing the S&P 500 by 13 percentage points four months into the year is not unique. This also happened in the late 1990s, when Buffett was called outdated while Cisco, Microsoft, and Intel drove the index upward. After the dot-com crash that followed, value stocks delivered several years of strong outperformance. Post-financial crisis, we saw another “narrow leadership” period with the “FANG” stocks. Each time, the concentration seemed like it would last forever—until it didn’t.
On the Oslo Stock Exchange, energy and defense stocks account for almost all the gains so far this year. The OSEBX index rose over 9% in March and was up more than 20% by the start of May, driven by Equinor, Aker BP, Vår Energi, and Kongsberg Gruppen in the wake of the war in the Middle East. Few actively managed Norwegian funds have index weights in these companies, and thus lag the index significantly.
Globally, the S&P 500 has delivered 86% returns over the past three years, compared to just 43% for the equal-weighted S&P 500. Such a wide gap hasn’t been seen since the dot-com bubble, and the discount on equal-weighted stocks relative to the market-weighted index is now the largest since 2010 (source: Lyrical Asset Management / Oppenheimer 2026 Outlook). In practice, this means companies with solid cash flows, healthy balance sheets, and long-term earnings potential are trading at historic discounts compared to the biggest index winners.
Buffett summed it up at Berkshire’s recent annual meeting: “The most likely time to buy things is when nobody else will answer their phones.” Opportunities rarely arise when everyone is euphoric. They arise when many investors chase the same trends, and fewer look the other way.
That’s exactly what characterizes contrarian positions—they feel uncomfortable. You don’t get confirmation from headlines or other investors. It requires patience. But history clearly shows that extreme concentrations tend to reverse, even if we don’t know when.
For Norwegian investors, there’s an added currency dimension. The NOK has strengthened significantly against both USD and EUR, primarily driven by oil prices. This amplifies the dispersion measured in Norwegian kroner, which could reverse when the energy market normalizes, as DNB and Danske Bank have pointed out.
What does this mean for your portfolio? Likely that it’s wise to review and reassess. When the most concentrated indices account for large parts of the gains, that’s precisely when rebalancing toward value, quality, and equal weighting is most valuable—and least popular. We believe the dispersion is an opportunity, not a problem. Feel free to reach out to have a chat.
