In 2024, our portfolio had 37–39 stocks not because that number was too high or low, but because market conditions supported broader participation, making diversification more effective. To better understand when concentration makes sense, we use a “concentration index” based on the NSE 500, calculated for the last 22 years, as the sum of the squared weights of individual stocks—similar to the Herfindahl-Hirschman Index. Historically, when this index falls, mid and small caps outperform, reflecting a broad-based rally; when it rises, large caps dominate, indicating narrower leadership. From 2021 to 2024, the index declined, and mid/small caps outperformed significantly. However, as of 2025, the index is rising again, suggesting that the market is becoming more concentrated. This aligns with earnings data: the percentage of NSE 500 companies outperforming the average dropped from 53% in June 2024 to 41% in December, and we expect this trend to continue. Similarly, median stock returns are now lagging the index, confirming a narrower market. This shift justifies a more concentrated portfolio, with larger weights in fewer high-conviction ideas, as broad mid/small-cap exposure is unlikely to perform uniformly well.