'Trees don’t grow to the sky': Nelson Peltz says the stock market's Trump 'euphoria' won't last

The stock market has been on a record-setting hot streak since Donald Trump won the White House last week. But billionaire activist investor Nelson Peltz doesn’t think it will last.

“No, trees don’t grow to the sky. Definitely not uninterrupted,” the Trian Partners founder said in an interview at CNBC’s Delivering Alpha conference. “There will be something that might upset it. I think you’ve got euphoria from the election.”

Major stock indexes, including the Dow Jones Industrial Average, the S&P 500, and the Nasdaq, all hit record highs in the days following Trump’s election win. These gains slowed Wednesday, with the Dow ending the day up just 0.11%, or about 47 points, the S&P 500 closing up 0.2%, and the tech-heavy Nasdaq falling roughly 0.26%.

Beyond the election-driven excitement, Peltz pointed to the high concentration of companies that currently drive the market.

“You’ve got the S&P 500, and then you’ve got the S&P 20-25,” he said. “You’ve got two different markets. It’s the wrong name. You’ve got these 20 companies that are swinging the cat around the room. And then you’ve got these other companies.”

That echoed observations from researchers at Goldman Sachs (GS), who have warned that the era of double-digit gains in the stock market may be coming to an end. The strategists estimate that the S&P 500 will deliver an annualized return of 3% over the next decade — well below the 13% returns of the last 10 years and the long-term average of 11%.

While they attributed much of that downward revision to a higher starting point going into the next decade, another major factor fueling uncertainty is an “extremely high level of market concentration,” particularly when it comes to the 10 largest mega-cap tech stocks, the strategists said.

These top 10 companies — which include Apple (AAPL), Microsoft (MSFT), Amazon (AMZN), Nvidia (NVDA), Google parent Alphabet (GOOGL), and Meta (META) — account for 36% of the overall index and are driving much of the returns. So far this year, these leading firms have returned almost43%, compared with 36% for the index as a whole.

Goldman said its forecast would be roughly 4 percentage points higher (7% instead of 3%) if the market were not so concentrated, with a baseline range of 3% to 11% growth instead of a possible -1% to 7% over the next decade.

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